Cryptocurrency Platform Hit with $500,000 Fine, Prohibited from Operating in British Columbia

An enforcement action has been taken against a cryptocurrency exchange based in the Cayman Islands, resulting in a prohibition against its operation within British Columbia and the imposition of a $500,000 penalty by the provincial securities watchdog.

In a recently released official ruling, the British Columbia Securities Commission’s panel inflicted these penalties on LiquiTrade Ltd.

Reports indicate that LiquiTrade was absent during the penalty proceedings as per the issued document.

Earlier in the year, a news item from CTV News highlighted that LiquiTrade, under its LATOKEN exchange launched in 2020, was found in violation for functioning both as a derivatives market and an exchange, without proper registrations, as mandated by the B.C. Securities Act.

While LATOKEN has since disallowed the use of Canadian contacts for new account setups, investigations revealed that an account could still be opened by means of a VPN replicating an Australian location.

This adjustment in policy was recognized as a mitigating factor by the panel; nevertheless, the panel maintained that the BCSC needed to issue a stern preemptive message.

“Even though a late compliance to state regulations was observed, LiquiTrade initially opted to disregard our regulatory norms,” states the document. “These norms are critical in safeguarding investors against prevalent risks.”

The panel’s decision to impose a half-million-dollar fine coupled with a permanent market exclusion factored in the lack of financial harm to any British Columbians from LiquiTrade’s non-compliance.

A small percentage (less than 1%) of site traffic to LiquiTrade denoted Canadian origins as of April 2022, implying minimal customer engagement from British Columbia on the LATOKEN platform, as detailed in the report.

Despite the limited regional impact, the panel emphasized the necessity of their corrective measures for public safeguarding.

“Crypto asset trading platforms serving Canadians, no matter their location, must register with local securities regulatory bodies and comply with certain criteria to ensure investor protection,” declared the BCSC in a press statement regarding the ruling.

An authorized list of Canada’s crypto trading exchanges is accessible on the website of the Canadian Securities Administrators.

“This punitive measure against LiquiTrade is indicative of the proactive stance undertaken by Canadian regulators to ensure adherence to the nation’s securities laws by crypto market platforms,” added the BCSC.