scales of justice

With crypto regulation at the top of regulators’ agenda, Ontario’s Capital Markets Tribunal will consider a settlement with a crypto trading platform accused of defying the Ontario Securities Commission’s (OSC) call to get registered.

The tribunal will hold a hearing on Oct. 12 to consider a settlement with Aux Cayes Fintech Co. Ltd., which operates the OKEx Platform. The terms of the settlement will only be released if the deal is approved.

Back in August 2021, the OSC filed an enforcement case alleging Seychelles-based Aux Cayes Fintech violated Ontario securities law by failing to comply with registration and prospectus requirements.

The firm was one of several crypto platforms that was charged by the OSC for allegedly failing to heed a warning issued by the regulator in March 2021, which demanded that firms dealing with investors in Ontario contact the regulator to start the process of getting registered.

“Despite this warning, Aux Cayes did not contact the Commission by April 19, 2021 or at any time to start compliance discussions,” the OSC said in its allegations against the firm.

Earlier this year, the OSC settled with another firm, Bybit Fintech Ltd., over similar allegations.

In that settlement, the firm was ordered to disgorge almost US$2.5 million in revenue earned from investors in Ontario and ordered to pay $10,000 in costs. It also agreed to start registration discussions with the commission and stop dealing with investors in Ontario in the meantime.

In a speech on Oct. 6, OSC CEO Grant Vingoe reiterated the regulator’s commitment to bring oversight to the fledgling crypto sector, noting a deadline was given because OSC “didn’t want to give anyone the incentive to drag their feet.”

Since the 2021 deadline, OSC has “already had successful enforcement actions against international players” and these efforts have “been effective because many international platforms don’t want the stigma of being censured in Canada, which could hinder their credibility and global ambitions,” Vingoe said.

The OSC chief also stressed the importance of establishing a more level playing field between upstart firms in the crypto sector and traditional investment dealers.

“In our view, it is not sound public policy to exclude platforms that deal in the most speculative assets from IIROC oversight while requiring it for dealers that are involved in traditional capital markets. That is the very definition of an uneven playing field,” Vingoe said.