B.C. court sides with Binance

An investor who fell victim to an apparent crypto scam asked the courts in British Columbia to order crypto platform, Binance Holdings Ltd., to help identify the alleged fraudsters. However, the Supreme Court of B.C. has retracted an initial order against Binance, after finding that the platform had stopped serving clients in Canada when the fraud took place, and that the court doesn’t have jurisdiction.

According to the court’s ruling, Lixiao Wang sought orders against Binance and another crypto platform (Coinbase Global Inc.) after he allegedly fell victim to a crypto scam in 2024, losing $26 million worth of Bitcoin to scammers that claimed to be based in B.C.

In preliminary proceedings, without notice to the company, Wang sought orders demanding that Binance produce information about the identities of certain customers on its platform, along with asset preservation orders. At the time, the court found that there was sufficient connection to B.C. to make those orders. 

Binance then argued that those orders should be set aside, “because they were made on the mistaken premises that Binance carries on business in British Columbia, and the cryptocurrency Mr. Wang says was stolen from him can be traced to accounts on the Binance.com platform.”

Among other things, it argued that Wang didn’t tell the court that the company had withdrawn from Canada in 2023 and placed restrictions on its remaining Canadian users. As a result, it argued that the B.C. court has no jurisdiction. 

Now, the court has agreed with the company, finding that the evidence provided by Wang created a misleading impression of Binance’s operations in Canada after mid-2023. 

“Accordingly, the without notice orders must be set aside based on material non-disclosure,” it said. It added that, “on the evidence as a whole … there are insufficient connections to British Columbia for the court to assume … jurisdiction over Binance to grant the production and preservation orders sought by Mr. Wang.”

As a result, it dismissed the petition against Binance.

The court declined to order special costs against Wang, noting that there’s no evidence that he sought to mislead the court. 

“In my view, he applied in good faith to obtain information with which to prosecute a claim against unknown fraudsters who defrauded him of millions of dollars,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.