A Canadian securities regulator is targeting one of the largest digital currency derivatives platforms over its alleged non-compliance. The Ontario Securities Commission has issued a statement of allegations against Bybit, accusing the company of operating in its jurisdiction without obtaining the required licenses. Bybit becomes the latest platform targeted by the regulator, with Poloniex and KuCoin also being accused of similar violations.
In its statement, the OSC claimed that the digital asset products offered on the Bybit platform are securities and derivatives. “Bybit has nonetheless failed to comply with the registration and prospectus requirements under Ontario securities law,” the regulator stated.
Bybit has shot up the ranks to become one of the biggest players in the digital currency derivatives sector. It currently ranks as the second-largest futures trading platform by open interest. Nonetheless, the Canadian watchdog believes that it has been operating illegally in Ontario.
The OSC issued a notice on March 29 notifying all digital asset derivative platforms to register their operations as securities platforms or face regulatory action. It gave the firms a deadline of April 19. However, as it revealed, Bybit—along with others such as KuCoin and Poloniex—failed to heed the call.
The OSC noted on its statement of allegations that Bybit is a custodial digital asset platform. This implies that it holds all the clients’ digital assets, providing them with instruments or contracts to trade them. “These instruments or contracts constitute securities and derivatives,” it claimed.
It further alleged, “Bybit 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, contrary to the Ontario Securities Act.”
The OSC is seeking to have Bybit cease trading in securities and derivatives permanently or for such a period as it will specify. It also wants Bybit to be reprimanded and that it pays an administrative penalty not exceeding CAD 1 million for each failure to comply with the securities laws. It also wants Bybit to disgorge any amounts obtained as a result of non-compliance and pay the costs of the Commission’s investigations.
Bybit isn’t the first digital currency platform the regulator has gone after. As CoinGeek reported in May, the OSC published a statement of allegations against Poloniex.
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