Canadian Regulator Fines Bybit, KuCoin For Securities Law Violations

The Ontario Securities Commission said foreign cryptoasset trading platforms must play by the rules, or face enforcement action

article-image

Nathan Phillips square, near the OSC, Toronto, Canada; Source: Paolo Costa Baldi, CC BY-SA 3.0, via Wikimedia Commons

share

key takeaways

  • “Unlike KuCoin, Bybit responded to the OSC’s enforcement action,” the OSC said
  • KuCoin is barred from operating in Ontario, while Bybit continues to work on registration

The Ontario Securities Commission (OSC) has hit two foreign cryptocurrency exchanges with enforcement actions after finding they failed to comply with securities laws there. KuCoin has been banned from operating in the Ontario province, while Bybit agreed to pay a fine as it works with the authority to register appropriately.

“Bybit and KuCoin both operate unregistered cryptoasset trading platforms and allowed Ontario investors to trade securities without a prospectus or any exemption from the prospectus requirements,” the regulator said in a statement on Wednesday.

KuCoin, based in Seychelles, has been ordered to pay an administrative penalty of about C$2.1 million ($1.6 million), including investigative charges. Meanwhile, Singapore-based Bybit has reached a settlement with the regulator for about $2.5 million.

“Foreign cryptoasset trading platforms that want to operate in Ontario must play by the rules or face enforcement action,” Jeff Kehoe, OSC’s enforcement director, said. 

Bybit has agreed to continue working with the OSC to register its platform. In the event that registration talks fail, the exchange will close its operations with Ontario, the regulator said. 

“Unlike KuCoin, Bybit responded to the OSC’s enforcement action, maintained an open dialogue, provided requested information, and committed to engaging in registration discussions,” the regulator said.

Existing Bybit retail customers in Ontario will be asked to close their positions in some restricted products involving leverage, margin or the extension of credit. The exchange told Blockworks this week it’s looking to cut employee headcount by removing overlapping functions. 

The penalties come a little more than a year after the Canadian regulator warned exchanges operating in Ontario to contact the OSC by April 19, 2021 for registration or face enforcement action.

“Despite this warning, Bybit and KuCoin did not contact the OSC by the deadline and continued operations in Ontario,” the regulator said.

Authorities have been keeping a closing eye on cryptocurrency products as interest grows in the relatively nascent investment space. Earlier this year, crypto lender BlockFi agreed to pay $100 million in penalties to the Securities and Exchange Commission over allegations it illegally offered a high-interest yield product. 

The rulings could lead to hesitation among North American investors to invest in cryptoassets as a result of the jurisdiction’s harsh regulatory framework, according to Sheraz Ahmed, managing partner at STORM Partners. 

He thinks the exchanges themselves won’t be too concerned about financial penalties, as they have been operating successfully for years. “Fines are always preferable to complete bans, and sometimes it is better to ask for forgiveness than permission,” he said.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Option premiums and estimated daily volatility for bitcoin are projected to rise significantly around Nov. 6-8

article-image

Betting on opinions will make sentiment analysis more valuable and honest

article-image

Base DEX volumes have now eclipsed Kraken’s

article-image

Five of the Mag 7 companies are slated to report earnings this week, while 169 companies in the S&P 500 are due to publish quarterly results

article-image

VanEck’s Matthew Sigel noted this morning that bitcoin, which had lagged with low volatility before the 2020 election, is doing the same now

article-image

The Solana network itself did not appear to experience degraded performance during the airdrop