BCSC Panel Concludes LiquiTrade Conducted Illegal Exchange Operations

An investigative panel established by the British Columbia Securities Commission (BCSC) has determined that LiquiTrade violated Canadian laws by operating an unauthorized exchange within the country. Initially under scrutiny for breaching Canada's Securities Act in November 2022, LiquiTrade's crypto exchange, Latoken, was processing approximately $300 million in daily transactions for its user base of 1.5 million.

Probe into Latoken Crypto Exchange

After nearly two years of investigation, the BCSC panel discovered that LiquiTrade was in breach of Canadian securities legislation. The panel's findings revealed that LiquiTrade allowed users to engage in activities involving contractual rights related to crypto assets, constituting an investment in derivatives.

As per the regulations, LiquiTrade was obligated to be registered under the Securities Act to facilitate contract trading in British Columbia legally. The panel emphasized that LiquiTrade was operating as an exchange without the necessary authorization from the BCSC, as mandated by the Act.

The BCSC's report indicated that Canada has prohibited four crypto exchanges, including Catalyx, KuCoin, Poloniex, and xt.com exchange. On the contrary, 15 authorized crypto trading platforms, such as Bitbuy, Coinbase, and Fidelity, are permitted to operate within the region.

Potential sanctions against LiquiTrade range from financial penalties to a prohibition on its services. The final decision on the sanctions imposed on LiquiTrade is scheduled to be determined by August 14, as per the court filing.

Impact on Canadian Crypto Market

As Canada intensifies its crackdown on unregistered crypto exchanges, licensed trading platforms are experiencing growth. Dean Skurka, the CEO of Canadian crypto asset platform WonderFi, commented that there is a noticeable resurgence in retail participation in the crypto market.

Skurka acknowledged that the shift will not occur instantaneously but emphasized the positive indicators reflecting public acceptance of cryptocurrencies. WonderFi observed a surge in new user registrations coinciding with the record high Bitcoin prices.

The BCSC's actions against LiquiTrade underscore the regulatory measures being enforced to maintain integrity within the Canadian crypto landscape. While unauthorized exchanges face sanctions, licensed platforms are thriving and catering to the evolving demands of cryptocurrency investors.