OSC cracks down on unregistered crypto trading platforms
In March of 2021 the Ontario Securities Commission issued a warning that all crypto asset trading platforms that offer trading to Ontario residents must register with the OSC or face enforcement proceedings. Since then it has been cracking down on unregistered crypto asset trading platforms.
Just recently, on June 22, 2022, the OSC announced that it had obtained significant monetary penalties against two foreign companies that operated unregistered crypto asset trading platforms servicing Ontario investors. Those companies were Mek Global Limited, a company incorporated in the Seychelles, and PhoenixFin Pte. Ltd. , a company incorporated in Singapore (referred to collectively as “KuCoin”).
On June 21, 2022, the Capital Markets Tribunal ( the “Tribunal”) issued an order against KuCoin ordering KuCoin to pay a C$ 2 million penalty and C$ 96,5050.35 in costs, and also banning KuCoin permanently from participating in capital markets in Ontario.
The Tribunal also entered into a settlement agreement with a British Virgin Islands Company named Bybit Fintech Limited (Bybit), on June 9, 2022, pursuant to which, Bybit agreed to pay a penalty of over US$ 2.5 million plus C$ 10,000 for the costs of OSC investigation. Bybit also agreed to bring its operations into compliance with OSC regulations and is subject to a temporary ban on its activities while registration discussions with the OSC are ongoing. If registration discussions fail, Bybit will wind up its operations in Ontario.
Previously, the Federal Court issued an order against Coinsquare, a Canadian registered crypto trading platform, ordering Coinsquare to provide the Canada Revenue Agency with details of its account holders, including their identity , transaction records, and holdings.
As regulators continue to crack down on unregistered crypto trading platforms, it is expected that the CRA will likewise be going after these unregistered trading platforms and their account holders. Those who have unreported income from operating crypto businesses or crypto trading, or foreign assets of $100,000 or more, and who have not yet been contacted by the CRA, should apply for a tax amnesty now under the CRA’s Voluntary Disclosure Program before it is too late.