Binance Faces Class-Action Suit in Canada Alleging Securities Law Violations
Crypto exchange Binance is yet off the legal issues hook with a new class-action lawsuit filed on April 19 in Canada. The charges leveled against Binance illustrate that local authorities continue to investigate the world’s largest crypto exchange even after announcing its exit from Canada in May last year.
The Superior Court of Justice in Ontario had, on Friday, April 19, a publication, disclosed the certification motion on the class action suit. The plaintiffs allege Binance contravened the local securities laws by selling crypto derivative products to unsuspecting investors without fulfilling the requisite registration.
Binance Facing Lawsuit in Canada
The plaintiffs are tapping Jeremy Leeder and Christopher Lochan to represent them in the lawsuit, and they argue that Binance violated the Ontario Securities Act (OSA) in selling crypto derivative products. The plaintiffs’ attorneys are seeking damages and rescission of the contracts as per Section 133 in OSA, alleging the sales’ illegality and void for nonregistration.
The submission by plaintiffs’ attorneys termed the derivatives trades unlawful. The suit indicates tens of thousands of Canadians fell for the Binance scheme to invest in crypto derivatives products.
The case reflects on the Ontario Securities Commission (OSC)report that crypto derivatives traders comprise multiple retail investors. The certification motion reveals that over 50% of the crypto owners in Canada have over $5,000.
Crypto exchange Binance is a leading platform, accounting for 58% of the global spot trading volumes executed within centralized exchanges by March 2024. Its leadership position manifests beyond the spot crypto trading venue by joining OKX and Bybit to run the largest derivatives market.
A recent report by Bybit indicated that Binance and OKX are dominant players in the derivatives markets among the centralized exchanges (CEXs).
The class action suit filed last week adds a twist to Binance’s run with the regulators that started in June 2021 when the firm announced the exit of the crypto exchange operations. The departure plans emerged following the OSC’s warning to the firm founded by Changpeng Zhao.
Canadian Authorities Investigating Binance
The documents filed last week indicated that Binance failed to adhere to the announced cessation of sales, prompting action from the OSC in early 2022. The regulator informed the defendant’s intentions to obtain the cease trade order.
The departure of Binance from the Canadian market in May 2023 did not stop local authorities from cracking down on the crypto exchange. The court motion reveals that the OSC investigation is ongoing.
Binance’s legal team has yet to issue a response to the class action lawsuit filed in Ontario. The lawsuit adds to the legal battles that Binance faces months after the multi-billion dollar settlement and the resignation of Zhao from the US regulators.
