Ontario Bans KuCoin Permanently, Settles With Bybit For US$2.5 Million

The continuing enforcement of the Ontario Securities Commission (OSC) on cryptocurrency firms has turned its attention to non-compliant KuCoin and ByBit. The agency announced on Wednesday the Capital Markets Tribunal’s decisions on the enforcement actions against the two crypto exchanges.

OSC claimed that both firms “operate unregistered crypto asset trading platforms,” as well as “trade securities without a prospectus.” The agency set an April 2021 deadline for crypto companies to bring their trading platforms into compliance with Ontario securities law. Both firms, although unregistered, continued to trade in the province beyond the deadline.

KuCoin, a digital asset exchange by Seychelles-based Mek Global and Singapore-based PhoenixFin, has been banned permanently after it has failed to appear and defend itself during the tribunal’s proceedings.

“It is in the public interest to permanently bar the Respondents from participating in Ontario’s capital markets. In my view, permanent bans are necessary to protect investors, are proportionate to the Respondents’ misconduct, and would act as a necessary deterrent to other like-minded persons,” read the tribunal’s decision, penned by adjudicator M. Cecilia Williams.

The ban covers cease in trading and acquiring any securities or derivatives, prohibition on utilizing exemptions in Ontario securities law, and a prohibition on registration to the province’s capital markets.

KuCoin is also demanded to pay a $2.0 million administrative penalty and $96,550.35 to cover the investigation costs.

In contrast, Bybit Fintech participated in the tribunal proceedings and reached a settlement agreement with OSC. The firm paid US$2.5 million plus $10,000 to cover the investigation costs.

“It has always been our primary objective to operate our business in compliance with all relevant rules and regulations in Ontario. Bybit took immediate steps to cooperate with the OSC upon being notified of the issuance of the Statement of Allegations and we have started the registration and compliance process in Ontario,” said CEO Ben Zhou.

The British Virgin Islands-registered crypto platform also signed an undertaking to bring its operations into compliance. The document includes a promise not to accept new accounts, offer new products to existing accounts, and wind up operations in Ontario should “registration discussions fail.”

The firm also undertakes to donate to the University of Waterloo any revenue it generates from its current Ontario accounts until registration.

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

The two companies are the latest crypto firms at the receiving end of OSC’s crackdown on the industry. In March 2022, Binance made its permanent exit out of the province after a series of kerfuffles with the agency regarding misrepresenting the digital asset platform’s trading restrictions.

Information for this briefing was found via OSC and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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