An unregistered, offshore crypto trading platform has been banned from operating in British Columbia and ordered to pay a $500,000 penalty after a regulatory hearing panel found that it violated securities rules.
LiquiTrade Ltd., which is based in the Cayman Islands, was banned from trading in B.C. and fined after a hearing panel of the B.C. Securities Commission (BCSC) found in July 2024 that the company and its LATOKEN platform “created a derivatives trading market, promoted derivatives, and operated as an exchange” without being registered.
The panel said there was no evidence that investors lost money due to the firm’s misconduct, and that the number of investors it served was relatively small. Yet, it also concluded that “LiquiTrade chose to work outside of important requirements which are designed to mitigate some risks faced by investors in this province.”
According to the panel, LiquiTrade “did not make submissions on sanctions or otherwise participate in the sanctions process.”
In its decision, the panel said the sanctions sought in the case would send a strong deterrent message to the crypto sector, and also that the penalty would ensure a level playing field for firms operating in compliance with the rules.
“It is important to ensure that compliant firms operating with appropriate restrictions and regulatory supervision are not placed at a competitive disadvantage against those that flout our regulatory system,” the panel said.
The panel also noted that the company has taken some action to try to prevent Canadian investors from accessing the platform, but that this solution wasn’t perfect.
The panel reported that when one of the BCSC’s investigators tried to open an account using virtual private network software to disguise his location — to indicate that he was located in Sydney, Australia — he was able to open an account on the platform, even after the panel found that it had violated securities law by operating without registration.
The BCSC said its enforcement action against LiquiTrade is part of an ongoing, co-ordinated effort by securities regulators “to ensure that crypto trading platforms comply with securities legislation in Canada.”