Binance, the cryptocurrency exchange, is facing a fresh class-action lawsuit in Canada over accusations of breaching security laws. Ontario’s Superior Court of Justice released a certification motion for the lawsuit on April 19, marking another legal challenge for Binance.
The lawsuit revolves around allegations of security law breaches, specifically accusing Binance of selling crypto derivative products to retail investors without proper registration. Plaintiffs, led by Christopher Lochan and Jeremy Leeder, assert that Binance contravened the Ontario Securities Act (OSA) and federal regulations through these transactions.
The lawsuit aims to secure damages and rescind unlawful derivative trades for the tens of thousands of Canadian users of Binance who invested in its cryptocurrency derivative products.
According to the Ontario Securities Commission (OSC), over 50% of Canadian crypto owners hold at least $5000 in the market. The certified motion highlights that “cryptocurrency derivatives traders include a significant number of retail investors.”
This class action follows Binance’s announcement a few years ago of plans to halt operations in Ontario, Canada, prompted by a warning from the OSC during a regulatory crackdown.
“Despite Binance’s stated intention to cease sales, in early 2022, the OSC informed the defendants of its plan to pursue a cease trade order,” states the new court document.
Although Binance announced its departure from Canada in May 2023, it remains under scrutiny by local authorities. “The OSC’s investigation into the defendants continues,” notes the court motion.
Binance Lawsuit Leaves The Exchnage’s Reputation in Question Again
This lawsuit deals another blow to Binance’s attempts to maintain its position as the leading cryptocurrency exchange, especially in the aftermath of Changpeng Zhao’s tarnished reputation.
In November 2021, Zhao admitted guilt to violating criminal US anti-money laundering regulations, resulting in his resignation as CEO and a hefty $4 billion fine against Binance.
This recent legal action underscores Zhao’s apparent disregard for legal compliance, with the alleged Canadian security law breaches occurring under his leadership.
Since assuming the role of CEO, Richard Teng has shown a proactive dedication to Binance’s future and rebuilding trust. His efforts include actively seeking a headquarters for Binance to facilitate regulatory adherence.
Furthermore, Teng has propelled the exchange forward by securing a crypto license in Dubai, signaling a positive shift away from Binance’s negative reputation toward being recognized as a trustworthy entity in a major jurisdiction.
Nevertheless, Binance’s past regulatory challenges continue to cast a shadow over these efforts, highlighting ongoing concerns about the company’s compliance practices.
