Ontario Watchdog Ousts KuCoin, Penalizes Bybit Over Non-Compliance

Key Insights:

• Ontario Securities Commission has taken enforcement actions against KuCoin and Bybit.
• Bybit has agreed to pay C$2.5M, while KuCoin is expected to pay the fine of C$2M and an additional C$100K.
• Ontario has booted several crypto exchanges from the province, including Binance and Poloniex, over non-compliance.

The Ontario Securities Commission (OSC) has accused several crypto exchanges of not being compliant with securities regulations in the Canadian province. 

For instance, the regulator accused Binance (BNB), the world’s largest crypto exchange, of failing to comply with Ontario’s Securities Act. Following this, the OSC clearly stated that Ontario users are restricted from opening new accounts and are banned from trading.

OSC said it is “unacceptable” as the exchange issued notice to Ontario residents without notifying the regulators.

The regulator has come down on other crypto exchange businesses, including Poloniex, for trading securities without registration that was “contrary” to the public interest.

OSC’s eyes now fell on KuCoin and Bybit

OSC announced Wednesday that it has scored two courtroom wins against KuCoin (KCS) and Bybit exchanges. 

The regulator has barred KuCoin from market participation in the province and has settled with Bybit, both accused of operating unregistered crypto trading platforms.

Per the official release, both the exchanges have allowed Ontario users to trade securities without a prospectus. Jeff Kehoe, Director of Enforcement at the OSC, noted that there would be no compromise on non-compliance. He added,

“Foreign crypto-asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action. The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”

The regulator had previously warned both the exchanges on March 29, setting a deadline of April 19 to start their registration discussions. Despite OSC’s warnings, neither Bybit nor KuCoin approached the regulator by the stipulated deadline and continued their unregistered operations, the release noted.

Hefty penalty imposed

The Capital Markets Tribunal panel has ordered monetary sanctions and a market participation ban on two companies that own KuCoin – Mek Global and PhoenixFin.

According to the order, OSC has ordered KuCoin to pay an administrative penalty of a C$2 million ($1.5 million) fine and a further C$96,550.35 (nearly $77,000) towards the costs of the OSC’s investigation.

While KuCoin has been barred from participating in Ontario’s capital markets, Bybit has cooperated with the OSC’s investigation and has reached a settlement agreement. The exchange, which recently confirmed laying off employees up to 30%, had paid nearly C$2.5 million ($1.9 million) and a further C$10,000 ($7,700) for covering investigation costs.

“Unlike KuCoin, Bybit responded to the OSC’s enforcement action, maintained an open dialogue, provided requested information, and committed to engaging in registration discussions.”

Bybit has also confirmed that it will not accept any new registrations from Ontarians nor offer new products to existing investors from the province. If the exchange fails to comply with the discussions, Bybit confirmed that it would withdraw its operations in Ontario.