Binance Faces Class-Action Lawsuit in Canada: The Ontario Superior Court of Justice has approved a class-action lawsuit against Binance, alleging violations of securities laws for selling crypto derivative products to retail investors without proper registration.
Allegations and Plaintiffs’ Claims: Represented by Christopher Lochan and Jeremy Leeder, the plaintiffs argue that Binance violated the Ontario Securities Act and federal law by failing to register and file a prospectus for derivative products sold to Canadian investors.
Significance of Retail Investors in Canada: The lawsuit highlights the substantial presence of retail investors in cryptocurrency derivatives trading in Canada, with over 50% of Canadian crypto owners holding at least $5,000 worth of cryptocurrency according to the Ontario Securities Commission (OSC).
Damages Sought: The plaintiffs seek damages and the rescission of unlawful derivative trades conducted on Binance’s platform, asserting that Binance’s failure to comply with registration requirements renders the sales illegal and voidable.
Regulatory Scrutiny: Regulators have categorized crypto contracts as securities or derivatives, subjecting their marketing to securities law and prompting increased scrutiny of platforms like Binance offering such products to retail investors.
Binance’s Regulatory History in Canada: Despite previous pledges to cease business with local investors and agreements with the Ontario Securities Commission (OSC), Binance remains under investigation for possible violations. The lawsuit outcome may significantly impact regulatory oversight and investor protection in the cryptocurrency industry.
Scope of Impact: Tens of thousands of Canadian users were reportedly affected by Binance’s alleged violations, with the plaintiffs arguing that these actions directly impacted retail investors who purchased crypto derivative contracts from the platform since September 13, 2019.
