Canada regulator: Poloniex is non-compliant

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The Ontario Securities Commission (OSC) has published a statement of the allegations against digital asset exchange Poloniex, accusing the company of trading securities without registering with the Canadian Securities Administrators (CSA) as required by the Ontario Securities Act.

Perhaps more notably, the statement explicitly says that the regulator is bringing the proceeding to “signal that digital asset trading platforms flouting Ontario securities law will face regulatory action.”

The action comes after the OSC warned digital asset providers in March that if they offer derivatives or securities trading to Ontarians, they must contact the OSC by April 19—or face regulatory action. According to the OSC, more than 70 firms got in touch. Poloniex—who is based in the Seychelles—did not, and continued offering its services in Ontario without complying with the requirements of Ontario’s securities law.

OSC’s enforcement branch, who are responsible for investigating and litigated breaches of the securities laws, is asking that the OSC order that Poloniex:

• is banned from trading securities or derivatives permanently or for such period as specified by the Commission,
• is prohibited from acquiring any securities permanently or for such period as specified by the Commission,
• not be granted any exemptions for any part of the Ontario securities law,
• be reprimanded by the OSC,
• be prohibited from acting as a registrant, investment fund manager or as a promoter permanently or for such period as specified by the Commission,
• pay a penalty of no more than $1 million for each failure to comply with Ontario securities law,

The standard that must be met for the OSC to make the orders requested is whether it is in the public interest to do so. The hearing will take place on June 18, 2021, at 10 a.m.

It appears that Grant Vingoe, chair and CEO of the OSC, is following through on signals he gave in a keynote address earlier this month that the OSC has started clamping down on non-compliant exchanges:

“Firms that have nothing to hide should embrace this opportunity to enhance confidence in their business by seeking registration and appropriate oversight. We have a lot of work ahead in processing applications by these firms, and we are committed to working with them to get this done. Enforcement will also likely be very busy in the coming weeks.”

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—
from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.