Cryptocurrency exchange Binance has been hit with a new class action lawsuit in Canada over allegations of security law violations. on April 19, the Ontario Superior Court of Justice published a petition for certiorari as part of the class action, putting Binance back in the legal hot seat.
The lawsuit stems from suspected security law violations, alleging that Binance sold cryptocurrency derivative products to retail investors without registration. The plaintiffs, represented by Christopher Lochan and Jeremy Leeder, claim that Binance violated the Ontario Securities Act (OSA) and federal law through these sales.
The lawsuit seeks compensation and remission of illegal derivative transactions for tens of thousands of Canadian Binance users who invested in cryptocurrency derivative products.
According to the Ontario Securities Commission (OSC) , more than 50% of Canadian cryptocurrency owners have at least $5,000 in the market, and the certified motion adds that “cryptocurrency derivatives traders include many retail investors.”
This class action comes just a few years after Binance announced plans to cease operations in Ontario, Canada, after the OSC issued a warning to the company for violating regulations.
“As a result of Binance’s failure to comply with the announced cessation of sales in early 2022. OSC notified the defendants of its intention to seek an injunction to stop trading,” a new court document reads. Despite the announcement to leave Canada in May 2023, the exchange is still on the radar of local authorities. “The OSC’s investigation of the defendants is ongoing,” the document says – the court motion reads.
Lawsuit puts exchange’s reputation in question again
This represents another blow to Binance ‘s efforts to justify its position as a leading cryptocurrency exchange in the face of damage to its image by Changpeng Zhao.
In November 2021. Zhao pleaded guilty to violating U.S. criminal anti-money laundering laws, leading to his resignation as CEO and a $4 billion fine against Binance.
This latest lawsuit is another testament to Zhao’s legal ignorance, and there have been numerous security law violations under his reign.
Since then, his successor, current CEO Richard Teng, has shown an active commitment to Binance’s future and restoring trust. This is evidenced by his recent efforts to secure Binance’s headquarters to help ensure compliance.
Teng has also pushed the exchange forward by obtaining a cryptocurrency license in Dubai, signaling a change in the negative narrative about Binance as a symbol of trust from a major jurisdiction. However, these efforts are consistently overshadowed by Binances uncertain past when it comes to regulation.
