On July 23, the Ontario Securities Commission (OSC) announced a new agreement with CoinLaunch Corp. This announcement also included a notice of public settlement hearing scheduled for July 24, where it will be determined if the agreement is in the best interests of the public.
According to the statement issued by the OSC, CoinLaunch had promised a number of services related to cryptocurrencies, tokens, and assets, but had done so without receiving proper registration from the OSC. This was in violation of the Ontario Securities Law. In the statement, Katrina Gustafson, senior litigation counsel for the OSC, explained:
CoinLaunch engaged in and held itself out as engaging in the business of trading in securities, without registration under Ontario securities law and where no exemption from the registration requirement was available.
CoinLaunch is accused of issuing both BCZERO and ECOREAL tokens. These two tokens qualified as securities under the Ontario law, which would have required the company to receive the proper registration before being able to provide the tokens. This did not occur.
In addition, it is reported that the company ran an ERC-20 smart contract platform that gave users the ability to create and issue tokens on the Ethereum Blockchain. This also appears to be a violation.
As part of the agreement, CoinLaunch has filed a notice with the Canadian government providing their intent to dissolve the company.
Canada has been looking to take a more proactive stance in regulating crypto assets. The Canadian Securities Regulatory Agency (CSRA) has been looking to develop a plan for the next four years related to the entry and acquisition of crypto assets. The regulatory agency is looking to create requirements on those who would serve as crypto custodians, as well as work on developing regulations surrounding blockchain-based securities. How close it is to these regulations being developed is not known.
While CoinLaunch has ceased operations in terms of issuing tokens, the company’s website is still up and providing information for customers related to digital assets. No statement was made on the company’s website as to the allegations or the intent to dissolve. Neither were statements found on their Twitter or Facebook accounts.
It is expected that the settlement agreement will be accepted. There appears to be no one contesting whether this agreement is actually in the best interest of the public, making the hearing a mere formality.
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