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The Ontario Securities Commission has alleged Bybit exchange of violating the rules and regulations of the securities law and has put the public at high risk.
Even though Canada is embracing cryptocurrency, the regulators in the country have a stringent law against crypto exchanges. In one of the incidents, the Ontario Securities Commission (OSC) alleges that Bybit is posing risks for local investors and creating problems, an uneven playing field within the trading platform.
Issuing a notice
The OSC has issued a notice to the exchange and informed that a hearing will be held against the exchange which is flouting the Canadian securities law. According to the notice, the OSC has alleged that Bybit has failed to comply with the registration and prospectus requirements under the Ontario Securities law.
The exchange has breached the deadline given by the OSC as April 19. Hence, the commission will be holding a hearing by July 15 to address the matter.
The exchange has to follow a process for crypto asset trading platforms to bring their operations into compliance with Ontario Securities law. OSC also mentioned that Bybit has flouted this process and has put the investors into risks and problems while creating an uneven playing field within the trading platform sector.
Bybit did not compliance with the law
The regulatory authority has also said that Bybit has not worked and filed the prospectus with the OSC. They have not even applied for legal operations in Canada. The exchange has provided instruments and contracts to investors that have securities and derivatives under Canadian securities law. These trades violate portions of the Ontario Securities act and do an activity that is against the public interest.
In the July hearing, the solutions for problems will be addressed and Bybit trading will be put on hold for a given period. The exchange will be prohibited from acquiring any securities permanently. The OSC has also asked to put a fine of up to $1 million on the exchange for the violation of the Securities Law.
Bybit under scrutiny
Bybit has been under scrutiny for violating the law not only in Canada but the exchange has also been warmed by the Japanese regulators too. The warning was given in regard to the Bybit marketing campaign that targeted Japanese investors.
Singapore based Bybit was running an unregistered crypto service in Japan. So, the Japan Financial Services Agency had issued a formal warning letter to the exchange stating that the firm is not registered to run crypto services in the country.
Norbet Gehrke, founder and representative director of Tokyo FinTech said that Bybit is not blocking Japanese IP addresses. It did not mention that the local investors are not allowed to access the platform and do not block local IPs from accessing it. However, another Panama-based exchange, Deribit, has blocked Japanese-based IP addresses.
Canada cryptocurrency scenario
The Bank of Canada is concerned about the rising volatility in cryptocurrency assets. The bank feels that it is an emerging vulnerability for the financial system of Canada
In the annual review of financial risks, policymakers led by Governor Tiff Macklem said that crypto markets are not systematic and have a great deal of volatility. The bank sees crypto as the rising concern.
The central bank believes that the concerns are also associated with the stablecoins- a type of cryptocurrencies that are pegged to a more stable asset to reduce volatility. If it is widely used, then it has the potential to disrupt the bank’s monetary policy mechanisms.