A new class action lawsuit has been filed against crypto exchange Binance in Canada, with plaintiffs accusing it of violating securities laws in the country.
On April 19th, a certification motion was published by the Superior Court of Justice in Ontario for a class-action lawsuit against the company.
The allegations
This alleged that it had sold crypto derivatives products to retail investors without obtaining the necessary registration.
Jeremy Leeder and Christopher Lochan are representing the plaintiffs. They said that crypto derivatives products were sold by Binance in violation of federal law and the Ontario Securities Act (OSA).
The lawsuit is seeking rescission and damages of unlawful derivatives trades. According to the plaintiffs, tens of thousands of Canadians using the Binance website had invested in its crypto derivatives products.
The certification motion highlighted that many retail investors engaged in crypto derivatives trading.
The Ontario Securities Commission (OSC) disclosed that more than 50% of crypto owners in Canada have invested about $5,000 in the market.
As of March 2024, Binance accounts for more than 58% of the total spot trading volumes recorded on centralized exchanges, making it the world’s biggest crypto exchange.
The background
Not only is Binance popular for spot crypto trading, but is also responsible for running the biggest derivatives market amongst other exchanges, such as OKX and Bybit.
Bybit recently shared data showing that Binance, OKX, and the exchange itself almost completely dominate the derivatives market for centralized exchanges.
The latest class action lawsuit against Binance in Canada comes after it announced its plans to cease its operations in Ontario in June 2021.
This was after the company had been issued a warning by the OSC. The new court document said that the OSC had notified Binance in early 2022 about its plans to get a cease trade order.
This is because the crypto exchange did not cease sales. In May 2023, Binance announced its departure from the country.
However, this has not stopped local authorities from cracking down on it. The court motion said that the OSC was still investigating Binance.
Binance’s CEO
Meanwhile, Binance’s former CEO, Changpeng Zhao, is awaiting his sentencing in the United States, which is scheduled for April 30th.
The US Department of Justice (DOJ) has argued that he needs to spend at least three years in prison over charges of money laundering.
The lawyers have argued that his willful violation of laws should not be ignored because he believed he would not get caught and that the consequences would not be serious.
They also stated that his strategy of not complying with the laws had helped him become one of the richest people in the world and had also earned celebrity status in the crypto industry.
The 3-year sentencing is above the federal sentencing guidelines, which would have seen Zhao jailed for 18 months.