Following Poloniex and KuCoin, Canadian securities regulators allege Bybit violates securities law

The Ontario Securities Commission (OSC) of Canada has issued a notice to hold a hearing for the cryptocurrency exchange Bybit, citing that Bybit has shown contempt for and violated Canadian securities laws, exposing investors in the country to unbearable risks.

Bybit Violates Canadian Securities Regulations

The Ontario Securities Commission (OSC) issued a notice on 6/21, stating that the regulator had announced on 3/29 a requirement for cryptocurrency exchanges to register to comply with Ontario securities laws. Bybit, however, did not take action by the deadline of 4/19, leading the OSC to schedule a hearing on the matter as early as 7/15.

The document alleges that Bybit, registered in the British Virgin Islands, operates an unregistered trading platform in Canada, actively encouraging Ontario residents to use it and allowing them to trade cryptocurrency derivatives.

The OSC also pointed out that Bybit failed to submit a prospectus for legal operations in Canada. Nonetheless, the products and contract trading offered by the exchange to investors constitute securities and derivatives under Canadian securities law, violating public interest.

The OSC stated in the document:

Certain platforms like Bybit do not adhere to compliance procedures, exposing Ontario investors to undue risks and creating an uneven competitive environment in the cryptocurrency exchange industry.

In the upcoming provisional July hearing, the OSC plans to halt Bybit's operations and proposes a maximum fine of $1 million for the exchange's alleged violations of securities laws.

Poloniex and KuCoin Also Face Allegations

Last month, the OSC issued similar warnings to several exchanges, including

• Poloniex
• Mek Global
• PhoenixFin

Mek Global and PhoenixFin jointly operate KuCoin. The OSC stated that these exchanges failed to comply with Ontario securities laws and did not engage in compliance discussions with the OSC by 4/19.

Despite the U.S. SEC's delay in approving a Bitcoin ETF, Canada has consecutively launched three Bitcoin ETFs and later approved three Ethereum ETFs. However, the OSC's actions seem to indicate that crypto operators cannot act with impunity in Canada and must undergo regulatory compliance oversight to further protect the country's investors in an open trading environment.