Two golden coins - Bitcoin and Ethereum
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An unregistered, offshore crypto trading platform has been banned, ordered to pay a $1.5 million penalty, and to disgorge the revenues it earned from unregistered trading by Ontario’s Capital Markets Tribunal.

Following a hearing, the tribunal handed down its decision in the Ontario Securities Commission’s (OSC) case against Polo Digital Assets Ltd., the Seychelles-based company that operates the Poloniex platform. The tribunal found that the firm violated Ontario securities law by trading crypto for investors without complying with the registration and prospectus requirements.

While the company was initially represented by legal counsel in the proceedings brought against it by the OSC, the company later dropped out and wasn’t involved with the hearing at all.

Ultimately, the hearing went ahead, and the tribunal has now concluded that OSC staff proved that Polo Digital engaged in unregistered trading and distributed securities without a prospectus.

On sanctions, it ordered that the firm disgorge the US$1.8 million that it earned from investors in Ontario since the platform launched in 2014.

It also imposed a $1.5-million penalty (as a “necessary economic incentive” to Polo Digital and for “general deterrence” to the crypto asset trading sector), ordered $138,371.50 in costs and permanently banned the company.

“Polo Digital needs to understand that its conduct is not acceptable and that any such further misconduct will not be tolerated,” the tribunal said.

It also stressed the need to protect investors and said that failing to impose serious sanctions would “send a message to those in the crypto asset trading sector who have worked to come into compliance with Ontario securities law that despite those efforts they remain open to unfair competition from other industry players who operate in this market without appropriate registration and supervision.”

However, the tribunal’s decision also indicated that the platform may still be operating without registration. It noted that the company took action in February 2022 to block investors in Ontario from the platform — however, despite these efforts, OSC staff was still able to access the platform and trade Bitcoin.

As a result, the panel concluded that “those steps were not completely effective. Polo Digital is, therefore, still enabling trading in securities in Ontario in breach of Ontario securities law.”