Canada’s law enforcement agency, the British Columbia Securities Commission (BCSC), probed LiquiTrade Limited and found that it operated its LATOKEN exchange as an illegal and unauthorized entity. The authority alleges that the platform worked as an unregistered derivatives trading platform, allowing the trade of contractual rights of digital assets across the state.
LiquiTrade initially claimed that users trade digital assets on the platform. However, investigations by the BCSC panel found that the platform offered derivative trading of crypto assets, which allowed its users to initiate future withdrawals. According to the rules, the firm must first register under the regulatory act before offering derivative services in Canada. The BCSC noted in a statement :
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The panel found that Liquitrade, despite not being registered under the Securities Act, facilitated trading by several means, including creating a derivatives trading market and promoting derivatives that trade on LATOKEN. The panel also found that LiquiTrade was operating as an exchange. But it was not authorized to do so by the BCSC, as required by the Act.
LiquiTrade Violating Canadian Securities Act Since 2022
In November 2022, the commission accused LiquiTrade of violating the Securities Act in Canada. BCSC warned that LATOKEN’s parent company remains an unregistered entity and requested LiquiTrade to visit the authority’s office before a legal court hearing for investigation purposes. However, the company failed to comply with the order.
LiquiTrade avoided participating in the court hearings, but the commission kept notifying them of every step of the process. Hence, in the latest movement, the BCSC clarifies that it will now consider legal punishment for violating its sanctions, including potential fines or a complete ban on its services in the regime.
In a final statement, the BCSC panel stated:
LiquiTrade has never been registered in any capacity under the Act, and there is no recognized exchange or clearing agency in British Columbia operated by LiquiTrade or using the name LATOKEN.
As per the court filing, LiquiTrade must appear in the upcoming court hearing, which will commence on August 7. The court will finalize its decision possibly by August 14.
Canada’s Crackdown on Crypto Exchanges
Until March 2024, Canada’s crackdown on crypto firms prohibited four dominant exchanges, Kucoin, Poloniex, XT.com, and Catalyx, from operating in the state. However, licensed platforms flourished in the region. More than 15 crypto trading firms, including BitBuy, Coinbase, and Fidelity, have been authorized because of their regulatory compliance with the legal agencies.
Since the beginning of this year, the Canadian regulatory authorities have been quite active in introducing regulatory constraints and amendments to improve its financial framework. On Jan 19, Canadian Securities Administrators (CSA) proposed regulatory amendments for handling crypto investments and protecting users’ funds. These improved regulatory movements ensure the mitigation of risks and aim to harmonize the crypto landscape in Canada.
As regulatory authorities intensify their oversight, crypto platforms must reflect an unwavering commitment to legal requirements. This will ensure operational legitimacy and users’ trust within the market.
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