Cryptocurrency giant Binance faces a fresh legal challenge in Canada with a newly filed class-action lawsuit, alleging breaches of securities laws. The lawsuit, filed on April 19 in Ontario’s Superior Court of Justice, accuses Binance of unlawfully selling crypto derivative products to retail investors without proper registration, violating the Ontario Securities Act (OSA) and federal law.
Led by plaintiffs Christopher Lochan and Jeremy Leeder, the lawsuit seeks damages and the cancellation of illegal derivative trades for the numerous Canadian users who invested in Binance’s cryptocurrency derivatives offerings. According to the Ontario Securities Commission (OSC), over 50% of Canadian crypto holders have significant investments in the market, with many retail investors engaged in cryptocurrency derivatives trading.
This legal action follows Binance’s announcement in May 2023 to halt operations in Ontario after facing warnings from the OSC during a regulatory crackdown. Despite this announcement, the OSC’s investigation into Binance continues, as highlighted in the court motion.
The lawsuit adds another layer of scrutiny to Binance’s reputation, already tarnished by previous controversies. Former CEO Changpeng Zhao’s guilty plea in November 2021 for violating US anti-money laundering regulations, resulting in his resignation and a hefty fine for Binance, has further eroded trust in the exchange.
While current CEO Richard Teng has taken proactive steps to address regulatory concerns, such as securing a headquarters for Binance to enhance compliance and obtaining a crypto license in Dubai, the company’s history of regulatory issues continues to cast a shadow over its efforts to rebuild trust.