Canada’s Ontario regulator bans KuCoin and fines Bybit

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Canada’s Ontario Securities Commission (OSC) has announced the conclusion of two enforcement actions against non-compliant crypto asset trading platforms, Bybit and Kucoin.

Bybit and KuCoin both operate unregistered crypto asset trading platforms and allowed Ontario investors to trade securities without a prospectus or any exemption from the prospectus requirements.

In March, the OSC warned crypto asset trading platforms that offer trading in derivatives or securities in Ontario that they must contact the OSC or face enforcement action.

The warning included a deadline of April 19, 2021 for such platforms to start registration discussions. Despite this warning, Bybit and KuCoin did not contact the OSC by the deadline and continued operations in Ontario.

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Bybit pays US$2.5 million and plans to register with OSC

The regulator settled with Bybit Fintech Limited (Bybit), incorporated in the British Virgin Islands, for failing to comply with Ontario securities law. Bybit disgorged USD $2,468,910 and a further CAD $10,000 towards the cost of the OSC’s investigation.

The OSC praised Bybit’s behavior – maintained an open dialogue, provided requested information, and committed to engaging in registration discussions, and gave an undertaking to the OSC, which represents a legally enforceable commitment by Bybit to the OSC.

While registration discussions are ongoing, Bybit confirmed that it will not accept new accounts for Ontario residents, offer any new products to existing accounts held by Ontario investors, or engage in any marketing and promotional activities targeted at Ontario residents.

Bybit also told the regulator that if registration discussions fail, the crypto platform will wind up its Ontario operations. For now, existing Ontario retail investors at Bybit will be required to close their positions in contracts that involve leverage, margin, or the extension of credit.

Any funds or assets remaining in Ontario retail investor accounts may be used for non-restricted products or withdrawn from the Bybit platform.

KuCoin pays $2 million and is permanently banned from Ontario

The enforcement action against KuCoin wasn’t as pleasant as the Capital Markets Tribunal ordered substantial monetary sanctions and a permanent market participation ban against Mek Global Limited, incorporated in the Republic of Seychelles, and PhoenixFin Pte. Ltd., incorporated in Singapore (collectively, KuCoin) for failing to comply with Ontario securities law.

The OSC obtained orders permanently banning KuCoin from participating in Ontario’s capital markets and requiring KuCoin to pay an administrative penalty of CAD $2,000,000 and a further $96,550.35 towards the costs of the OSC’s investigation.

Jeff Kehoe, Director of Enforcement at the OSC, said: “Foreign crypto asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action. The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”

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