Canadian Regulator Alleges Poloniex Not Complying With Securities Laws

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In Brief
  • The Ontario Securities Commission accuses Poloniex of not complying with regulations.

  • The exchange was asked to speak with the agency by April 19.

  • Regulators the world over scrutinizing crypto markets.

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The Ontario Securities Commission of Canada has said that Poloniex failed to discuss regulatory compliance with it, and as such, will hold a hearing on the matter on June 18.

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The Ontario Securities Commission [OSC] of Canada has published a notice stating that the Poloniex exchange has transgressed securities laws, among other violations. Staff members from the commission filed the allegations on May 25, with the hearing set for June 18.

Poloniex and compliance

Based in Seychelles, Poloniex was asked to speak with the agency by April 19 with the goal of getting it to fully comply with national securities laws. The exchange did not do so, so the OSC went ahead with the filing. The initial request was made because Poloniex holds trading accounts for residents in Ontario and markets itself to Canadians.

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The OSC is keen to ensure that crypto platforms abide by laws. In the note put forward by the agency, it states that Poloniex is “accountable for disregarding Ontario securities law,” also wishing to “signal that crypto asset trading platforms flouting Ontario securities law will face regulatory action.”

The regulator also said that the services that Poloniex offered amounted to securities and derivatives,

“While Poloniex purports to facilitate the trading of the crypto assets in its investors’ accounts, in practice, Poloniex only provides its investors with instruments or contracts involving crypto assets. These instruments or contracts constitute securities and derivatives.”

Over 70 crypto companies had reportedly spoken to the regulator regarding compliance, but Poloniex was not one of them. The decision by the OSC indicates that it is stepping up its scrutiny of the market, just as regulators in many other countries are doing the same.

Regulators in the North American continent have begun targeting crypto assets that are violating securities laws. The most notable of these was Telegram’s GRAM token, but one other prominent project under fire is Ripple and XRP, which has vehemently denied any wrongdoing.

The United States Securities and Exchange Commission (SEC), in particular, has been keen on ensuring relevant projects register as a security. It continues to look into the matter, with the XRP case taking center stage.

Regulators scrutinizing crypto market

As the crypto market experiences a volatile period and entrenches itself in the wider public, regulators have become warier in needing to enforce regulation. In the Western market, they are primarily concerned with investor protection, which has become a major talking point in recent weeks.

The SEC released a digital asset securities framework in 2019 and has also ramped up its supervision of the market. Officials in recent weeks have said they will offer more regulation soon, with investor protection being the priority.

Most recently, it was revealed that the White House will look into the broader implications of the crypto market. The Biden administration was briefed by the Treasury department on the crypto market, and various agencies will work together to form regulations.

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Rahul is an India-based Digital Marketer who became attracted to Bitcoin and blockchain technology in 2014. Ever since, he's been an active member of the community. Other than that, he is a die-hard gamer. This gadget freak is well renowned in his circle for binge-watching Game of Thrones.

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