Canadian regulator alleges OKEx operator violated securities law

The Ontario Securities Commission asserted that Aux Cayes FinTech Company Limited, a legal entity in the Republic of Seychelles that operates the OKEx crypto exchange, has failed to comply with the province’s law governing securities.

In an August 18 notice, the Ontario Securities Commission, or OSC, alleged that Aux Cayes may have been involved in illegal activities and could face regulatory action if it does not cooperate with authorities. According to the OSC, crypto asset products offered through OKEx are considered securities and derivatives, and are subject to Ontario securities law. The regulator claims Aux Cayes failed to meet the region’s registration and prospectus requirements.

The OSC issued a warning to all crypto asset trading platforms operating in the province in March that they must comply with the securities law by April 19 or face regulatory action. Although the regulator’s enforcement team said Aux Cayes responded to limited inquiries in June, the platform did not provide “basic information about its Ontario clients,” including the number of accounts and holdings added.

The enforcement team recommends that the OSC order Aux Cayes to cease all cryptocurrency trading, ban it from acquiring securities, and potentially pay millions of dollars in fines and restitution fees. According to an Aug. 19 notice, the agency has programmed a hearing for September 15 to address the allegations.

Related: Ontario Securities Regulator Takes Action Against Kucoin

The commission has done similar accusations against Bybit, the cryptocurrency exchange KuCoin and Polo Digital Assets, the parent company of Poloniex. In all cases, the OSC alleges that the platforms did not contact the securities regulator before the April 19 deadline and violated securities law. Top crypto exchange Binance announced in June that it would stop providing services to users located in Ontario.