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Highlights
- KuCoin got banned by the Ontario Securities Commission.
- The regulators have imposed a fine of C$ 2 million for non-compliance on KuCoin.
- A permanent restriction on market participation goes along with the monetary penalty for KuCoin.
The Canadian regulators levied enforcement charges against the cryptocurrency exchanges Bybit and KuCoin on Tuesday. As per the official statement of the OSC, both Bybit and KuCoin ran unregistered cryptocurrency asset trading platforms that permitted investors in Ontario to trade securities without a prospectus or any other kind of prospectus exemption.
Notably, Bybit has negotiated with the regulators. As per the official statement, the crypto asset trading platform kept an open communication line, provided the required information, and participated in registration negotiations.
The negotiations helped the regulators and Bybit come to a settlement agreement. Bybit has agreed to pay around C$ 2.5 million for the OSC inquiry and another C$ 10,000 for OSC investigations.
Additionally, Bybit provided an undertaking that requires them to put their business practices into conformity. However, KuCoin and the OSC were unable to come to a settlement.
The regulators have imposed a fine of C$ 2 million for non-compliance and C$ 96,550.35 for the costs of the OSC inquiry. A permanent restriction on market participation goes along with the monetary penalty for KuCoin, mentioned in the OSC statement.
What's next for crypto platforms and investors?
Foreign crypto-asset trading platforms must follow the regulations or risk sanctions if they wish to operate in Ontario. The results made public today should be a crystal-clear statement that we will not put up with violations of Ontario securities law, said Jeff Kehoe, OSC's Director of Enforcement.
The OSC said in its statement that Bybit has further affirmed that it won't accept new accounts from residents of Ontario while registration discussions are still open.
Also, it won't offer any new products to current accounts held by Ontario investors and won't participate in any marketing or advertising campaigns with an Ontario focus. Bybit will also cease operations in Ontario if registration discussions fall through.
Bybit says it will need investors to narrow their positions in some specific products. Any money or assets still in Ontario retail investor accounts can be withdrawn from the Bybit platform or utilised for non-restricted goods.
We are unsure what is in store for KuCoin investors as the official statement didn't mention anything specifically for them. It is advisable to wait for any further updates from the OSC.
Bottom line
The severe punishment could negatively affect investor sentiments as the cryptocurrency market has been crashing over the past few weeks. Due to increased volatility, crypto investors are already skeptical and might become more alert.
Studying and researching all the pros and cons is advisable before investing in virtual currencies.
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