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On May 12, Binance announced on Twitter that it would be “proactively withdrawing” from Canada because “new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market no longer tenable for Binance at this time.”
The world’s largest cryptocurrency exchange did not, however, disclose that, just days two prior, the Ontario Securities Commission had notified Binance it was under investigation for potentially circumventing the securities law of Canada’s largest province.
The exchange, which is led by founder Changpeng Zhao, disclosed the investigation in a filing this month with the Capital Markets Tribunal, reported Financial Post, a Canadian newspaper, on Tuesday.
“We consider this latest action by the OSC to be ungrounded,” a Binance spokesperson told Fortune in a statement. “The OSC has made a request to access virtually limitless private data in the hope they may find something untoward.”
The OSC investigation comes after Binance had previously come to terms with the agency in March 2022 to limit cryptocurrency trading in Ontario, among other concessions, because of its “past conduct,” according to the filing. And it follows February 2023 guidance issued by Canada’s securities regulator to compel exchanges to register with the agency or cease operations.
Two months later, stablecoin-maker Paxos, decentralized exchange dYdX, and other crypto companies announced exits from the country. Binance’s decision to leave stood out, however, due to the company’s size and because Zhao had grown up in Canada.
It was unclear how much of the company’s announced departure was due to the securities regulator’s recent rule-making, and it is unclear whether the OSC’s investigation into the exchange added further impetus for an exit.
“We will vigorously defend our business, the crypto community and the industry against this action,” added the Binance spokesperson.
The Canadian authority’s investigation into Binance is not the only regulatory or legal action against the company to have publicly emerged in the past few months.
In late March, the Commodity Futures Trading Commission, a U.S. agency, filed a civil suit against Binance, alleging, among other details, that the exchange’s employees knew that the cryptocurrency trading platform had facilitated “potentially illegal activities.”
And less than a week later, class action lawyers filed a $1 billion civil suit against Binance, Zhao, and a suite of crypto influencers for selling unregistered securities.
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