Cryptocurrency exchange Binance has been slapped with a new class-action lawsuit in Canada following allegations of security law violations.
On April 19, Ontario’s Superior Court of Justice published a certification motion for a class-action lawsuit, putting Binance back in the legal hot seat yet again.
The lawsuit stems from suspected security law violations, alleging that Binance sold crypto derivative products to retail investors without registration.
Plaintiffs represented by Christopher Lochan and Jeremy Leeder claim that Binance violated the Ontario Securities Act (OSA) and federal law through these sales.
The lawsuit seeks damages and recissions of unlawful derivative trades for the tens of thousands of Canadian Binance users who invested in its cryptocurrency derivatives products.
According to the Ontario Securities Commission (OSC), more than 50% of Canadian crypto owners have at least $5000 in the market, with the certified motion adding that “cryptocurrency derivatives traders include a great many retail investors.”
This class action comes just a few years after Binance announced plans to cease operations in Ontario, Canada after the OSC hit the firm with a warning following a regulatory crackdown.
“As a result of its failure to adhere to this announced cessation of sales, in early 2022, the OSC notified the defendants of its intention to seek a cease trade order,” the new court document reads.
Despite Binance’s announcement to depart from Canada in May 2023, the exchange is still on local authorities’ radar. “The OSC’s investigation into the defendants is ongoing,” the court motion reads.
Binance Lawsuit Leaves The Exchnage’s Reputation in Question Again
This represents another blow to Binance’s efforts to justify the company’s position as the leading cryptocurrency exchange in the wake of Changpeng Zhao’s damage to its image.
In November 2021, Zhao pled guilty to breaking criminal US anti-money laundering regulations, leading to his resignation as CEO and a $4 billion fine to Binance.
This latest lawsuit is another testament to Zhao’s legal ignorance, with the Canda security law violations occurring under his watch.
Since then his replacement, current CEO Richard Teng, has demonstrated a proactive commitment to Binance’s future and restoring trust. This is evidenced by his recent efforts to secure a headquarters for Binance to aid in regulatory compliance.
It is an honour and with the deepest humility that I step into the role of Binance’s new CEO.
We operate the world’s largest cryptocurrency exchange by volume. The trust placed on us by our 150m users and thousands of employees is a responsibility that I take seriously and hold…
— Richard Teng (@_RichardTeng) November 21, 2023
Teng has also pushed the exchange forward by obtaining a Dubai crypto license, signaling a shift in the negative Binance narrative as a symbol of trust from a major jurisdiction.
However, these efforts are constantly overshadowed by Binances shaky past when it comes to regulation.
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