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Canada

“Misleading advertisements and improper marketing strategies may encourage investors to take on risks they would normally avoid," said CSA chair Louis Morisset.

The Canadian Securities Administrators, or CSA, and Investment Industry Regulatory Organization of Canada, or IIROC, have issued guidelines for crypto trading platforms operating in the country to avoid “advertising and marketing materials that could mislead investors.”

In a Sept. 23 publication, the Canadian regulators’ guidelines warn crypto companies not to advertise “gambling style” promotions in which an investor is encouraged to sign up within a given time limit to take advantage of a reward or opportunity. Though the guidance was seemingly vague on restrictions concerning social media posts, the regulators recommended trading platforms designate an individual to review and approve communications and set up a system to ensure all messages are in compliance with regulatory guidelines.

“Misleading advertisements and improper marketing strategies may encourage investors to take on risks they would normally avoid, and not respecting the requirements under securities law and IIROC rules may raise concerns about a crypto trading platform’s fitness for registration,” said CSA chair Louis Morisset.

Some of the seemingly egregious examples the regulators provided included exchanges suggesting that they are registered under current securities laws or otherwise approved by regulators. The CSA and IIROC encouraged trading platforms to consult with their legal teams prior to releasing advertising and marketing announcements to the public.

The IIROC is a self-regulatory body that proposes measures to protect investors and support healthy domestic capital markets while the CSA is a national standards group covering Canada’s ten provinces and three territories. The two securities bodies have previously issued joint statements regarding rules on crypto industry players and worked together to clarify the use of crypto with the country’s securities laws.

Canadian regulator alleges OKEx operator violated securities law

August 19, 2021 Coin Telegraph

Canada

The commission has made similar allegations against Bybit, crypto exchange KuCoin and Polo Digital Assets.

The Ontario Securities Commission claimed Aux Cayes FinTech Company Limited, a legal entity in the Republic of Seychelles that operates crypto exchange OKEx, has failed to comply with the province’s law governing securities.

In an Aug. 18 notice, the Ontario Securities Commission, or OSC, alleged that Aux Cayes may have engaged in illegal activity and could face regulatory action if it fails to cooperate with authorities. According to the OSC, crypto asset products offered through OKEx are considered securities and derivatives, and subject to the Ontario securities law. The regulator claims Aux Cayes has failed to comply with the region’s registration and prospectus requirements.

The OSC issued a warning to all crypto asset trading platforms operating in the province in March that they must be in compliance with the securities law by April 19 or face regulatory action. Though the regulator’s enforcement team said Aux Cayes did respond to limited inquiries in June, the platform failed to provide “basic information about its Ontario clients,” including the number of accounts and aggregate holdings.

The enforcement team is recommending the OSC order Aux Cayes to cease all crypto trading, be prohibited from acquiring any securities, and potentially pay millions of dollars in penalties and disgorgement fees. According to an Aug. 19 notice, the agency has scheduled a hearing for Sept. 15 to address the allegations.

The commission has made similar allegations against Bybit, crypto exchange KuCoin and Polo Digital Assets, the parent company of Poloniex. In all cases, the OSC alleges the platforms failed to contact the securities regulator by the April 19 deadline and were in violation of the securities law. Major crypto exchange Binance announced in June it would cease providing services to users located in Ontario.

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June 21, 2021 Coin Telegraph

Bybit

The commission alleges Bybit exposes local investors "to unacceptable risks and create[s] an uneven playing field within the crypto asset trading platform sector.”

The Ontario Securities Commission has issued a notice stating that it will be holding a hearing against Bybit regarding the crypto exchange allegedly “flouting” Canadian securities law.

In a Monday notice from the Ontario Securities Commission, or OSC, the regulatory body alleged Bybit had “failed to comply with the registration and prospectus requirements under Ontario securities law” despite the OSC issuing an April 19 deadline for crypto exchanges operating in the province. As a result, the commission will be holding a hearing as early as July 15 to address the matter.

“A process is in place for crypto asset trading platforms to bring their operations into compliance with Ontario securities law,” said the OSC. “Entities such as Bybit, which flout this compliance process, expose Ontario investors to unacceptable risks and create an uneven playing field within the crypto asset trading platform sector.”

The regulatory body alleges that Bybit has not filed a prospectus with the OSC to legally operate in Canada, while the exchange provides instruments and contracts to investors which constitute securities and derivatives under Canadian securities law. Such trades would reportedly violate portions of the Ontario Securities Act and involve activity “that is contrary to the public interest.”

The proposed July hearing will address solutions, including that Bybit cease trading for a given period and “be prohibited from acquiring any securities permanently.” The OSC also proposed fining the exchange up to $1 million for each alleged violation of the securities law.

In separate statements from the OSC in the last month, the commission made similar allegations against crypto exchange KuCoin and Polo Digital Assets, the parent company of Poloniex. In both cases, the OSC alleges the exchanges failed to contact the securities regulator by the April 19 deadline.

The Canadian province of Ontario has become home to many crypto firms pushing new boundaries in local regulations. In February, Toronto-based Purpose Investments launched the first Bitcoin exchange-traded fund, or ETF, in North America, a fund that has since grown to more than $880 million assets under management. Evolve Funds Group and Ninepoint Partners have also received regulatory approval for crypto ETFs.

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Ontario Securities Commission

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