Canadian Regulator takes action against Bybit for not complying with securities law

Canadian Regulator Ontario Securities Commission has taken action against crypto exchange Bybit for not complying with securities law. The Canadian regulator has published a Statement of Allegations against Bybit for failing to comply with Ontario securities law. OSC says Bybit which is incorporated in the British Virgin Islands, is operating as an unregistered crypto asset trading platform, and encouraging Ontarians to use the platform, and allowing Ontario residents to trade crypto asset products that are securities and derivatives. The main allegation against Bybit is that it has failed to comply with the registration and prospectus requirements under Ontario securities law. In March, OSC had warned cryptocurrency trading platforms that offer trading in derivatives or securities in Ontario that they must contact OSC staff or face potential regulatory action. These crypto platforms were given deadline of April 19,2021 to discuss how to bring crypto trading platform's operations as a dealer or marketplace into compliance. In spite of the warning of OSC, Bybit did not contact the regulator. Now the first hearing against Bybit is scheduled for July 15,2021. OSC has said they will continue to take action against non-compliant crypto exchanges and are in contact with international securities regulators to exchange information to support enforcement action. OSC said in their statement of the allegation, "A process is in place for crypto asset trading platforms to bring their operations into compliance with Ontario securities law. Entities such as Bybit, which flout this compliance process, expose Ontario investors to unacceptable risks and create an uneven playing field within the crypto asset trading platform sector." The Canadian Regulator alleges that Bybit has breached the Ontario securities law and their conduct is contrary to the public interest. The alleged statement adds that "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" and Bybit is trading in securities without complying with the prospectus requirements and without an applicable exemption from the prospectus requirements. OSC in the last month has declared that the commission made similar allegations against crypto exchange KuCoin and Polo Digital Assets. In both cases, the OSC alleges the exchanges did not contact the regulator by the April 19 deadline.