AMF institutes proceedings against three entities and an individual related to the CoinEx crypto trading platform
Montréal – On May 24, 2023, the Autorité des marchés financiers (the “AMF”) filed an originating pleading (pdf - 352 KB)This link will open in a new windowUpdated on May 25, 2023Acte introductif d’instance (in French only) with the Financial Markets Administrative Tribunal (the “Tribunal”) against CoinEx Global Limited (CoinEx), CoinEx Global Limited (CoinEx Canada), CoinEx Global Limited (CoinEx Estonia), Vino Global Limited and Haipo Yang.
An AMF investigation found evidence that the aforementioned entities are facilitating transactions relating to cryptoassets via the website www.coinex.com, which is accessible from Québec. These entities are subject to securities legislation, as they are using the website to offer a number of financial products and services that qualify as securities or derivatives. However, they are not registered with or recognized by the AMF in any capacity whatsoever, have not prepared a prospectus subject to a receipt issued by the AMF and are not benefitting from a discretionary exemption. Moreover, these entities are not pursuing an application for registration with the AMF or any other member of the Canadian Securities Administrators (the “CSA”) in order to comply with securities legislation.
This pleading is in addition to, among other things, the proceedings instituted by the AMF in March 2023 against entities related to the crypto trading platform XT.com and is a further example of the commitment and ongoing, coordinated efforts of the CSA to ensure that crypto asset trading platforms comply with securities legislation in Canada.
The Tribunal will be required to rule on the evidence adduced before it.
Steps taken by the AMF and the CSA to protect investors
Over the past few years, the AMF has issued several notices in concert with the CSA with a view to implementing a regulatory framework that promotes the protection of Québec consumers who invest through crypto trading platforms.
After launching a consultation on a proposed regulatory framework for crypto trading platforms in 2019 and providing guidance on the application of securities legislation to them in 2020, the CSA outlined the regulatory framework for their activities in greater detail in 2021.
That same year, the CSA also provided guidance to crypto trading platforms on requirements relating to advertising, marketing and social media use.
On August 15, 2022, CSA members stated that they expected crypto trading platforms that operate in Canada while pursuing an application for registration to provide them with a pre-registration undertaking. On December 12, 2022, the CSA published an update announcing that it would be strengthening this approach.
On February 22, 2023, the CSA announced that crypto trading platforms that operate in Canada while pursuing their applications for registration with CSA members are expected to provide an enhanced pre-registration undertaking to their principal regulator.
The Autorité des marchés financiers is the regulatory and oversight body for Québec’s financial sector.
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