Canada is leaving no stones unturned in its quest to sanitize the crypto-based businesses operating within its borders. In one of the latest efforts of the country in this regard, the British Columbia Securities Commission (BCSC) recently found LiquiTrade in violation of Canada’s Securities Act, bringing up the possibility of potential sanctions against the platform.
LiquiTrade’s Latoken Exchange Deemed Illegal
The trouble for LiquiTrade began in November 2022 when the BCSC launched an investigation into its Latoken crypto exchange. At the time, Latoken boasted a user base of 1.5 million and was processing an impressive $300 million in daily transactions on average. However, after nearly two years of investigation, the BCSC panel may have found LiquiTrade guilty of operating illegally.
According to the finding, LiquiTrade allowed the trade of “contractual rights of underlying crypto assets,” which the BCSC classified as derivatives. However, any business that will facilitate such a category of investments must have registered under the Securities Act, an authorization that LiquiTrade clearly lacked. Simply put, LiquiTrade did not have the requirement to operate as either an exchange or a platform dealing in derivatives.
Possible Sanctions Loom for LiquiTrade
This ruling adds LiquiTrade to the growing list of unregistered crypto exchanges banned by Canada. Since March 2024, the country has barred four other platforms; Catalyx, KuCoin, Poloniex, and xt.com, from operating. However, that is not to say that the country has not been welcoming to innovation. For context, 15 crypto trading platforms, including prominent names like Bitbuy, Coinbase, and Fidelity, have secured licenses to operate legally within Canadian borders.
The specific sanctions LiquiTrade will face are yet to be determined. However, potential penalties could range from big monetary fines to a complete ban on their services in Canada. According to the court filing, a final decision will be issued by August 14, 2024.
Canada’s regulatory stance on crypto exchanges sends a clear message. While unregistered platforms face the risk of sanctions, licensed operators can capitalize on a fast-growing market. This approach aims to foster a safety-conscious and compliant environment for Canadian investors and traders to explore cryptocurrency.
