Cryptocurrency exchange Binance faces a class-action lawsuit in Ontario, Canada. Binance offered crypto derivatives to retail investors, allegedly violating the Ontario Securities Act and federal regulations., according to the lawsuit filed in Ontario's Superior Court of Justice. 

Plaintiffs Christopher Lochan and Jeremy Leeder represent harmed Canadian investors, claiming these offerings led to significant financial damages. This legal action includes any Canadian who purchased Binance’s cryptocurrency derivatives after September 13, 2019.

The legal challenge reveals the deep penetration of cryptocurrency derivatives among Canadian retail investors. Over half of Canadian crypto owners possess at least $5,000 in cryptocurrency assets. 

The lawsuit seeks both damages for affected investors and cancellation of the trades deemed unlawful under Canadian law.

Regulatory Background 

Crypto contracts often fall under securities or derivatives classification, thus requiring adherence to stringent securities laws. 

Despite a previous commitment to cease operations in Ontario following a warning from the Ontario Securities Commission (OSC) in June 2021, Binance continued operations. This led the OSC to threaten a cease trade order in early 2022, contributing to the current legal predicament.

Current Status and Future Implications

While allegations remain unproven, the court's decision to certify the class action suggests the plaintiffs’ claims hold substantive weight. This lawsuit may set a significant precedent for how crypto exchanges operate in Canada and influence cryptocurrency regulation worldwide. Binance has yet to respond to the lawsuit. 

Binance is also facing fines and penalties of over US$2.7 billion from U.S. derivatives regulators. In a separate legal proceeding, the exchange admitted to violating U.S. law.