Canadian regulator alleges OKEx operator violated securities law

Published at: Aug. 19, 2021

The Ontario Securities Commission claimed Aux Cayes FinTech Company Limited, a legal entity in the Republic of Seychelles that operates crypto exchange OKEx, has failed to comply with the province’s law governing securities.

In Wednesday's notice, the Ontario Securities Commission, or OSC, alleged that Aux Cayes may have engaged in illegal activity and could face regulatory action if it fails to cooperate with authorities. According to the OSC, the crypto asset products offered through OKEx are considered securities and derivatives, and subject to the Ontario securities law. The regulator claims Aux Cayes has failed to comply with the region’s registration and prospectus requirements.

The OSC issued a warning to all crypto-asset trading platforms operating in the province in March that they must be in compliance with the securities law by April 19 or face regulatory action. Though the regulator’s enforcement team said Aux Cayes did respond to limited inquiries in June, the platform failed to provide “basic information about its Ontario clients,” including the number of accounts and aggregate holdings. At the time, OKEx issued a notice to users in Ontario and Quebec, saying they "shall not access any of the services" on the platform.

The enforcement team is recommending that the OSC order Aux Cayes to cease all crypto trading, be prohibited from acquiring any securities and potentially pay millions of dollars in penalties and disgorgement fees. According to Thursday's notice, the agency has scheduled a hearing for Sept. 15 to address the allegations.

Related: Ontario securities regulator takes action against Kucoin

The commission has made similar allegations against Bybit, crypto exchange KuCoin and Polo Digital Assets, the parent company of Poloniex. In all cases, the OSC alleges that the platforms failed to contact the securities regulator by the April 19 deadline and were in violation of the securities law. Major crypto exchange Binance announced in June it would cease providing services to users located in Ontario.

Tags
Regulation
Cryptocurrency Exchange
Law
Okex
Canada
Related Posts
Regulators: Deceased Quadriga Founder Committed Fraud
The Ontario Securities Commission, or OSC, claims that the crypto exchange Quadriga collapsed in 2018 because of fraud committed by its late founder, Gerald Cotten, who passed away on his honeymoon in India. The report released on June 11, revealed by CBC Canada, says Cotten opened several accounts under aliases and credited himself with “fictitious currency,”. He traded this currency with unsuspecting clients of his Vancouver-based crypto exchange. The deceased Quadriga founder was unable to meet his client’s withdrawal requests when the price of crypto assets fell. He then created a Ponzi scheme, covering the demand using funds from other …
Regulation / June 11, 2020
Most Crypto Users Think QuadrigaCX CEO Faked Own Death
Eighteen months after Gerald Cotten, founder and Chief Executive Officer (CEO) of QuadrigaCX, was reported to have died while doing volunteer work at an orphanage in India, and most crypto users apparently believe he’s still alive. The Canadian exchange is just one of many that are suspected of fraudulent exit scams, with publicity around the cases believed to be turning some users off of crypto. According to an online poll conducted during a Virtual Consensus 2020 event ⁠— “QuadrigaCX - Yell Into the Void and Get Some Questions Answered” ⁠— 60% of viewers polled said they believed Cotten was definitely …
Regulation / May 13, 2020
Binance tells regulators it will cease operations in Ontario... for real this time
Binance confirmed in an undertaking to the Ontario Securities Commission, or OSC, in Canada dated March 16 that the crypto exchange will cease activities involving Ontario residents. Binance will also stop opening new Ontario accounts and provide fee waivers and fee reimbursements to certain Ontario users under the administration of a third party, the company said. The undertaking appears to mark the end of a disagreement that started in June, when Binance announced that it would no longer service Ontario accounts and customers were advised to close out active positions by the end of the year. The month prior to …
Adoption / March 18, 2022
Canadian regulator takes enforcement actions against Bybit and KuCoin
The Ontario Securities Commission, or OSC, issued financial penalties against Bybit and KuCoin, claiming violation of securities laws and operating unregistered crypto asset trading platforms. In a Wednesday announcement, the Ontario regulator said it had obtained orders banning KuCoin from participating in the province’s capital markets and fining the exchange for more than $1.6 million. The OSC also announced that, as part of a settlement agreement, Bybit disgorged roughly $2.4 million and paid the regulator $7,724 as part of the costs of its investigation. Both firms allegedly failed to comply with Ontario securities laws, but only Bybit “responded to the …
Regulation / June 22, 2022
Canadian Judge Approves $1.6M in EY, Legal Firm Fees in QuadrigaCX Case
The Supreme Court of Nova Scotia, Canada, has approved over $1.6 million in fees for parties seeking funds from former Canadian cryptocurrency exchange QuadrigaCX, according to recently released court documents. Justice Darlene Jamieson ordered to approve the activities, fees and disbursements incurred by the Monitor — Big Four audit firm EY — in the ongoing proceedings of QuadrigaCX. The exchange ostensibly lost access to its cold wallet holdings following the death of its founder, Gerald Cotten, in December 2018, and now owes over $198.4 million to an estimated 115,000 users. Jamieson also approved the fees and disbursements of representative counsel, …
Blockchain / July 31, 2019