Ontario OSC hits KuCoin with second regulatory warning

abdelaziz Fathi

The Ontario Securities Commission is warning investors that KuCoin – the fifth-largest crypto exchange in the world by trading volume – is unregistered in Ontario.

The OSC also fired a warning shot across the bow of unlicensed platform selling cryptocurrency to Canadians, charging them with breaching the province’s securities regulations.

Three companies affiliated with KuCoin were also called out by the OSC that they “are not registered to deal or advise in securities in Ontario.” In its statement of allegations, the regulator said KuCoin ignored a previous call to start discussions about how to comply with the rules.

Earlier in June, the OSC slapped Bybit and KuCoin with enforcement actions for failing to comply with securities laws in the Canadian province. The watchdog determined that both exchanges were operating noncompliant platforms that allowed Ontario residents to trade unregistered securities.

While Bybit responded to enforcement actions and settled the regulatory concerns with the OSC, KuCoin didn’t return any comment.

To continue operating while their application is being processed, cryptocurrency platforms must give their primary regulator a pre-registration undertaking. By making these commitments, they acknowledge that its platforms are bound by terms and conditions that address investor protection issues.

If a cryptocurrency trading platform is unable to file an undertaking or does not adhere to its requirements, CSA members may seek legal action.

The OSC statement went on to warn that it reached out to other crypto-asset trading platforms to initiate the registration process, or face enforcement action, including temporary orders.

“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,” said Jeff Kehoe, Director of Enforcement at the OSC.

The news comes shortly after Crypto.com has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ in Canada. The registration comes amid a nation-wide crackdown on unregulated exchanges.

Binance, the world’s largest cryptocurrency exchange, informed a Canadian provincial regulator in March that it would no longer be accepting new customers. The industry’s giant seemingly opted to pull out of Ontario, rather than comply with securities law or face regulatory scrutiny.

Ontario’s securities watchdog also said Binance has provided an “undertaking” to cease trading for existing Ontario-based accounts. Facing the threat of regulatory sanctions, the exchange updated its terms of use, declaring Ontario a “restricted jurisdiction.” As a result, Binance has blocked services in Canada’s most populous province and asked Ontarians to take immediate measures to close out their trading positions.

 

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