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Canada to Sanction LiquiTrade for Securities Act Violation

ByDayne Lee

Jul 9, 2024

Canada to Sanction LiquiTrade for Securities Act Violation

A panel established by the British Columbia Securities Commission (BCSC) has found LiquiTrade guilty of operating an illegal exchange in Canada.

Violation of Canada’s Securities Act

LiquiTrade’s Latoken crypto exchange was initially accused of violating Canada’s Securities Act in November 2022. The exchange processed $300 million in daily transactions for its 1.5 million user base at the time.

Nearly two years into the investigation, a BCSC panel determined that LiquiTrade had indeed violated Canadian securities legislation. The panel stated, “LiquiTrade has never been registered in any capacity under the Act, and there is no recognized exchange or clearing agency in British Columbia operated by LiquiTrade or using the name LATOKEN.”

Multiple Violations Cited by Canadian Agency

The BCSC panel discovered that LiquiTrade allowed users to trade contractual rights of underlying crypto assets, which are considered derivatives investments. Consequently, LiquiTrade was required to register under the Securities Act before it could legally facilitate contract trading in Canada, specifically in British Columbia. The panel added, “The panel also found that LiquiTrade was operating as an exchange. But it was not authorized to do so by the BCSC, as required by the Act.”

As of March 2024, Canada has banned four crypto exchanges: Catalyx, KuCoin, Poloniex, and In contrast, 15 crypto trading platforms, including Bitbuy, Coinbase, and Fidelity, are authorized to operate in the region.

Upcoming sanctions on LiquiTrade could range from monetary penalties to a complete ban on services. According to the court filing, the sanctions on LiquiTrade will be finalized by August 14.

Thriving Licensed Trading Platforms

While Canada cracks down on unregistered crypto exchanges, licensed trading platforms continue to thrive. Speaking to Cointelegraph, Dean Skurka, CEO of Canadian crypto asset platform WonderFi, said, “We have certainly seen retail come back.” He added, “It’s not going to happen overnight, but indicators of public receptiveness to crypto are there.” Skurka noted that new signups at WonderFi spiked alongside Bitcoin hitting a new all-time high price.

StatusExchange NameNotes
BannedCatalyx, KuCoin, Poloniex, xt.comOperating without proper authorization
AuthorizedBitbuy, Coinbase, Fidelity, WonderFiCompliant with Canadian Securities Act

The BCSC’s decision to sanction LiquiTrade underscores the importance of regulatory compliance for crypto exchanges operating in Canada. This action reflects broader efforts to ensure that trading platforms adhere to legal standards to protect investors and maintain market integrity.

Industry experts believe that regulatory enforcement is essential to foster a secure and trustworthy crypto environment. Strict regulations may initially pose challenges for some exchanges, but they ultimately benefit the market by ensuring that only compliant platforms operate.

  • Pro-Regulation View: Advocates argue that clear and enforceable rules are crucial for the long-term growth and legitimacy of the cryptocurrency market.
  • Pro-Innovation View: Critics contend that excessive regulation could hinder technological advancement and innovation within the crypto sector.

The upcoming sanctions on LiquiTrade highlight the ongoing regulatory efforts to monitor and enforce compliance within the cryptocurrency industry in Canada. While unregistered exchanges face significant challenges, compliant platforms continue to flourish, reflecting the importance of adhering to regulatory standards. As the industry evolves, the balance between regulation and innovation will remain a key focus for stakeholders and regulators alike.

Featured image credit: Sopan Hadi via Vecteezy

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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