Canadian regulator accuses OKEx of non-compliance, wants millions of dollars in penalties

OKEx digital currency exchange failed to comply with regulation in one of the Canadian provinces and should pay millions of dollars in penalties. This is according to the Ontario Securities Commission (OSC) which has now set its sights on OKEx after going after Poloniex, Bybit and Kucoin.

Staff of the Enforcement Branch of the OSC brought the statement of allegations against Aux Cayes Fintech Company Limited, the Seychelles-based firm that operates OKEx. The statement alleges that Aux Cayes violated the Ontario securities laws.

In March 2021, the OSC notified digital currency operators that they must comply with Ontario securities laws by April 19.

“Despite this warning, Aux Cayes did not contact the Commission by April 19, 2021 or at any time to start compliance discussions,” the OSC alleges. When the regulator reached out to the company, it put in place some measures such as blocking new registrations from Ontario.

According to the regulator, the exchange refused to provide basic information about Ontario users, such as the total number of accounts and the aggregate holdings in these accounts. Aux Cayes allegedly claimed that this information was unavailable and couldn’t be provided.

“Aux Cayes has engaged in, or held itself out as engaging in, the business of trading in securities without the necessary registration or an applicable exemption from the registration requirement,” the regulator stated.

The watchdog wants the firm to cease trading in securities or derivatives permanently. It also wants the exchange to be prohibited from acquiring any securities permanently or for such period as is specified by the Commission.

In addition, the enforcement staff at the OSC wants “Aux Cayes to pay an administrative penalty of not more than $1 million for each failure to comply with Ontario securities law” and to “disgorge to the Commission any amounts obtained as a result of noncompliance with Ontario securities law.”

The OSC has been going after a number of digital asset exchanges it believes have violated the securities laws. In May, it made similar allegations against Poloniex, claiming the exchange was trading securities without obtaining the regulatory clearance needed. Elsewhere, Poloniex had to pay a $10 million fine to the U.S. Securities and Exchange Commission (SEC) in connection with its alleged unregistered operations.

The OSC has also gone after derivatives trading platform Bybit—yet another embattled exchange—and Kucoin exchange. In 2020, the regulator ordered BitMEX to restrict Ontario-based users from accessing the trading platform.

Binance, which is now leading in the space in terms of regulators who are going after it, exited the Ontario market in June.

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