- According to the Ontario Securities Regulator(OSC), KuCoin is operating as an unregistered crypto exchange.
- KuCoin is among the exchanges that failed to contact the regulator by the cut-off date set by the regulator for custodial crypto exchanges operating in Canada to initiate compliance conversions.
- This is a big blow to the renowned crypto exchange which currently has a daily turnover of over $1 Billion.
The OSC has published an official statement alleging that Seychelles-based Mek Global Limited and Singapore-based PhoenixFin Pte. Limited has failed to comply with the securities law in the province. The two are parent companies of KuCoin, which is operating an unregistered crypto asset as per the regulator.
“KuCoin 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,” the OSC mentioned. Enforcement action was initiated against the rapidly growing crypto exchange’s parent companies on June 7.
KuCoin failed to contact the regulator by April 19, which was set as the cut-off date for custodial crypto exchanges operating in Canada to begin compliance conversions, as per the latest regulations imposed on security exchanges.
What the OSC said?
The OSC states that it had warned all crypto-asset trading platforms offering securities or trading in Ontario to bring their operations or marketplace into compliance with its latest norms. If they are unable to do so, crypto exchanges were asked to get in touch with OSC staff, who would help them out in the process.
KuCoin, however, neither contacted the OSC nor did anything to bring its operations into compliance with the regulatory compliances despite a deadline. “While KuCoin purports to facilitate the trading of the crypto assets in its investors’ accounts, in practice, KuCoin only provides its investors with instruments or contracts involving crypto assets. These instruments or contracts constitute securities and derivatives,” the OSC has stated.
The OSC oversees the management and enforcement of securities in Ontario, which is also Canada’s most populated province. The Ontario Securities Commission is an independent Crown corporation dealing with the regulation of Ontario’s capital markets through suitable laws and policies.
What this could mean for KuCoin
KuCoin is one of the world’s fastest-growing cryptocurrency exchanges, having processed more than $1.3 billion worth of crypto transactions over 24 hours, as of June 8. The values place it at the 35th position globally among cryptocurrency exchanges. Going under the scanner is, therefore, a big blow to the exchange.
The OSC has already taken strict regulatory actions against Poloneix’s parent company Polo Digital Assets for the same reason – failure in complying with OSC regulations or even contacting its staff, by the April 19 deadline. Canada, and especially Ontario, has become a hot seat for crypto activities and has some of the world’s biggest exchanges to date.
Purpose Investments ETF has secured $1.3 billion in assets under management within just two months of its operation, while Evolve Funds Group has launched Ontario’s second Bitcoin ETF in February, signifying the burgeoning demand for digital assets. No wonder, Canadian securities regulators at the provincial levels have set their eyes on upgrading registration and regulation requirements with greater strictness.
