As part of a broader effort to bring the crypto sector to heel, the Ontario Securities Commission (OSC) is alleging that an unregistered offshore crypto-trading platform committed numerous securities law violations.
The allegations against a pair of companies (Manticore Labs OÜ and Manticore Labs Inc.) that operate as CoinField include failing to properly custody clients’ assets, violating registration and prospectus requirements by trading crypto with investors in Ontario, misleading investors, and not promptly fulfilling clients’ withdrawal requests.
“CoinField did not, and continues not to have sufficient crypto assets in custody to satisfy investor withdrawal requests,” the OSC alleged.
Some investors experienced delays withdrawing their assets, it said, while other investors’ withdrawal requests are still outstanding.
Additionally, the regulator alleged that the platform didn’t tell its investors, or the OSC, the true reasons for the delays.
The OSC said the head of the company admitted to another provincial regulator that the reason for the delays was a lack of assets to satisfy investors’ withdrawal requests, but that it told the OSC the reason for the delays was “an ongoing audit of the company.”
None of the allegations have been proven.
The OSC noted that its enforcement action is part of the Canadian Securities Administrators’ ongoing effort to ensure that cryptoasset trading platforms comply with securities legislation in Canada.
According to the regulator, the CoinField platform, which began dealing with investors in 2018, blocked access to new clients in 2021, and began fully blocking the platform in Ontario earlier this year.