LiquiTrade Guilty of Running Illegal Crypto Exchange in Canada

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The British Columbia Securities Commission (BCSC) has found LiquiTrade, the operator of the Latoken crypto exchange, guilty of running an illegal exchange in Canada. This verdict follows an investigation into the exchange’s activities, which were first brought to light in November 2022.

The investigation revealed that LiquiTrade allowed users to trade contractual rights of underlying crypto assets. This trading activity required registration under the Securities Act, a requirement that LiquiTrade did not meet. Additionally, the panel found that LiquiTrade was operating as an exchange without the necessary authorization from the BCSC.

Illegal Operations

The Latoken exchange, under LiquiTrade’s management, processed $300 million in daily transactions for its 1.5 million users. Despite its large scale, the BCSC’s panel found that LiquiTrade had never been registered in any capacity under Canada’s Securities Act. The panel’s statement was clear:

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“LiquiTrade has never been registered in any capacity under the Act, and there is no recognized exchange or clearing agency in British Columbia operated by LiquiTrade or using the name LATOKEN.”

Implications

The consequences for LiquiTrade could be severe. Potential sanctions include hefty monetary penalties and a possible ban on its services in Canada. The final decision on these sanctions is expected by August 14.

This case adds to a growing list of actions taken by Canadian authorities against unregistered crypto exchanges. As of March, Canada has already banned four crypto exchanges: Catalyx, KuCoin, Poloniex, and XT.com. In contrast, 15 crypto trading platforms, including Bitbuy, Coinbase, and Fidelity, are authorized to operate in the country.

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Canada has Committed to Regulation

The crackdown on unregistered exchanges highlights Canada’s commitment to regulating the crypto market and protecting investors. Despite these regulatory challenges, licensed trading platforms are thriving.

Dean Skurka, CEO of Canadian crypto asset platform WonderFi, shared his insights. He observed a resurgence in retail interest in crypto assets, stating, “We have certainly seen retail come back.” Skurka pointed out that new user signups at WonderFi spiked alongside Bitcoin reaching new all-time high prices.

He emphasized that while the resurgence won’t happen overnight, indicators of public receptiveness to crypto are positive.

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