Crypto platform Binance claims ‘miscommunication’ with Canadian regulators, won’t be serving Ontario customers

9 months ago - January 01, 2022
Ontario issues warning over Binance
Ontario issues warning over Binance
Crypto platform Binance claims ‘miscommunication’ with Canadian regulators, won’t be serving Ontario customers

Crypto platform Binance claims ‘miscommunication’ with Canadian regulators, won’t be serving Ontario customers

Cryptocurrency platform Binance says “a miscommunication” with Canadian regulators prompted a warning to investors by the Ontario Securities Commission that the company is not authorized to do business in the province, and it agreed Friday with the OSC that it will not be serving Ontario customers.

The Thursday warning from the OSC advised that Binance – one of the world’s largest crypto traders – is not registered in Ontario and therefore not authorized to sell derivatives or securities in the province. The commission said it issued the announcement in response to a message from Binance suggesting to customers it would continue to operate in Canada – despite saying in June it would pull out of Ontario rather than face regulation.

“Binance represented to OSC staff that no new transactions involving Ontario residents would occur after December 31, 2021,” the OSC said in its news release. But the company’s notice to users appeared to rescind the commitment. “This is unacceptable.”

Late Friday, Binance issued a statement saying that earlier in the day, it “had a constructive meeting with the OSC to explain the notice and to clarify any confusion or misunderstanding that our actions may have caused.”

The confusion stemmed from a Dec. 26 tweet by Binance founder and chief executive officer Changpeng Zhao, who shared a link to the company’s Christmas Eve registration of Calgary-based Binance Canada Capital Markets Inc. with FINTRAC (the federal Financial Transactions and Reports Analysis Centre of Canada) as a money-services business. It followed with a customer message.

That led crypto-focused media to report this week that the company would continue to operate in Canada.

“Binance’s notice was intended to communicate that Binance had decided to actively pursue registration in Canada and that Ontario users would not be required to close or liquidate their accounts on December 31, 2021,” the company said. “We acknowledge and understand that this message may not have been as clear as intended and immediately sought to remedy this miscommunication.”

Binance said there will be no change to the restrictions for Ontario users. They are not permitted to trade on the Binance platform or open new accounts. Binance also agreed to not market its services to Ontario residents or issue any communication to Ontario users regarding the regulatory status of their account without advance consultation with the OSC.

Binance said it “is committed to a transparent and active engagement with all of its Canadian regulators.”

An OSC spokesman declined to comment Friday.

Binance has come under scrutiny from regulators around the world. The Dutch central bank said in August that the trading platform was not in compliance with its anti-money laundering and anti-terrorist financing laws. Regulators in Japan, Britain, Germany, Italy, Hong Kong and Malaysia also issued warnings against Binance this year.

This past March, the Canadian Securities Administrators, the umbrella group of provincial and territorial securities commissions, issued guidelines on how to regulate crypto exchanges. The CSA determined these businesses are essentially securities dealers because they facilitate trades.

The OSC said platforms that offer their services to Ontarians are subject to regulation, regardless of where they are based. It warned platforms that they must contact OSC staff by mid-April to discuss how to bring their operations into compliance or face potential regulatory action.

There are now six crypto asset trading platforms registered in Ontario: Wealthsimple, Coinberry, Netcoins, Coinsmart, Fidelity and Bitbuy.

Globally, more than US$2-trillion is now invested in crypto assets, more than the total amount managed by Canadian mutual funds and exchange-traded funds.

We also recommend