Ontario Securities Commission Penalizes KuCoin and Bybit for Regulatory Non-Compliance
- The Ontario Securities Commission (OSC) has issued a range of penalties on crypto exchanges KuCoin and Bybit for trading unregistered securities and derivatives.
The Ontario Securities Commission (OSC) has imposed penalties on crypto exchanges KuCoin and Bybit for failure to comply with securities law in the jurisdiction.
According to the Canadian authority, the Capital Market Tribunal agreed to a settlement from ByBit. The panel, however, has imposed tough monetary sanctions, and a ban from capital market participation on KuCoin (a collective name for the companies Mex Global and PhoenixFin Pte).
Since March last year, the OSC has required all crypto exchanges trading derivatives or securities to register with it. After the deadline of April 29, 2021, the OSC said it would impose strict enforcement actions on unregistered companies.
Ontario Authorities Go After Bybit and KuCoin
The OSC now says Bybit and KuCoin ignored the order, continuing their unlicensed operations in Ontario. The firms also engaged with Ontario investors without providing them with a prospectus and its criteria for investor exemption. Its actions, according to the watchdog, created unfair markets and exposed investors to high risk.
KuCoin is now required to pay CAD$2.1 million, or roughly $1.6 million. The fine is the collective sum of the firm’s administrative fine, and costs for the regulator’s investigation.
Bybit, on the other hand, has paid a heavier fine of over CAD$2.4 million (roughly $1.8 million) even though it cooperated with the authorities. The British Virgin Islands-based company has also agreed to have the OSC oversee its activities to ensure regulatory commitment.
Even more, Bybit is to scale down on its operations to new and existing customers. Henceforth, the exchange is not allowed to register new accounts for Ontario residents. It is also banned from offering new products to its current Ontario customer base or marketing itself in the region. The exchange is now expected to inform investors to wind down on restricted positions involving leverage, margins, or credit extensions. Should regulatory discussions fail, Bybit will have to shut down its Ontario operations.
Regarding the events, Jeff Kehoe, Director of Enforcement at the OSC said:
“Foreign crypto-asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action. The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”
For Bybit, this adds to its woes with the current market slump. This week, the Seychelles-based exchange was forced to reduce its workforce to maintain profitability. Bybit was also shut down in the UK last year following the regulatory ban. KuCoin, on the other hand, was forced out of the Chinese market following the country’s ban on the cryptocurrency industry.
For the greater crypto industry, the OSC’s actions show greater interest by regulatory authorities in the cryptocurrency market.