Binance, one of the world's largest cryptocurrency exchanges, is facing a fresh legal challenge in Canada. The exchange has been hit with a new class-action lawsuit, alleging security law violations related to the sale of cryptocurrency derivative products to retail investors.
The Ontario Superior Court of Justice published a certification motion for the class-action lawsuit on April 19, once again putting Binance in the legal spotlight. Plaintiffs, represented by Christopher Lochan and Jeremy Leeder, claim that Binance violated the Ontario Securities Act (OSA) and federal law by selling crypto derivative products to retail investors without proper registration.
The lawsuit seeks damages and rescission of unlawful derivative trades for the tens of thousands of Canadian Binance users who invested in its cryptocurrency derivatives products.
According to the Ontario Securities Commission (OSC), more than 50% of Canadian crypto owners have at least $5000 in the market. The certification motion highlights that "cryptocurrency derivatives traders include a great many retail investors."
This legal action follows Binance's announcement in May 2023 to cease operations in Ontario, Canada, after the OSC issued a warning to the firm during a regulatory crackdown. Despite this announcement, the exchange remained under the authorities' scrutiny, as revealed by the ongoing investigation into the defendants by the OSC.
This new class-action lawsuit poses another challenge to Binance's reputation, particularly in the aftermath of legal issues involving former CEO Changpeng Zhao. While current CEO Richard Teng has been proactive in steering Binance's future and restoring trust, the exchange continues to grapple with its past regulatory challenges. Despite recent efforts, such as obtaining a crypto license in Dubai, Binance's history with regulations remains a point of concern.
