Canadian state regulator, the Ontario Securities Commission (OSC), has taken enforcement action against two cryptocurrency exchanges, Bybit and Kucoin, for not complying with local regulations.
The OSC issued a warning on March 29, 2021, to the unauthorized crypto exchange in the state to contact the regulator or face enforcement action. However, both exchanges continued to operate in the Canadian state without approaching the regulator for a license.
Announced on Wednesday, the Canadian watchdog has slapped heavy fines on both platforms. Bybit Fintech Limited has disgorged almost US$2.5 million, along with another CA$10,000 as the regulatory investigation cost.
Seychelles-incorporated Mek Global and Singapore-incorporated PhoenixFin, both collectively operating the Kucoin brand, are facing permanent bans. In addition, they are facing an administrative penalty of CA$2 million and have to shell out a further CA$96,550 for the investigation cost.
Cooperation Pays
Bybit escaped the ban as the exchange responded to the enforcement action and cooperated with the regulatory investigation. The exchange even provided an undertaking for making its operations compliant with Canadian regulations.
Now, Bybit suspended the onboarding of new clients and the addition of new products for existing Ontario-based clients until the registration with the OSC is complete. And, the crypto exchange should wind up its Canadian operations if its registration discussion fails.
Moreover, Bybit will restrict access to certain products like contracts that involve leverage , margin, or the extension of credit for Ontario clients. Additionally, it will liquidate their positions in these products.
“Foreign crypto asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action,” said OSC’s Director of Enforcement, Jeff Kehoe. “The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”
Earlier, the OSC took action against the crypto exchange, Poloniex for securities law breaches. Also, Binance, the largest crypto exchange in terms of trading volume, exited Ontario last year, citing mounting regulatory pressure.
