XT.com – AMF marks major milestone in offensive to enforce crypto trading platform compliance
Decisions and Freeze and cease trade orders Securities
Montréal – On September 20, 2023, further to an originating pleading filed by the Autorité des marchés financiers (the “Authority” or the “AMF”), the Financial Markets Administrative Tribunal (the “Tribunal”) issued an important decision (pdf - 408 KB)This link will open in a new windowUpdated on November 3, 2023 sanctioning the operators of the crypto trading platform XT.com, known as XT.COM Exchange (also doing business as XT Exchange and XT.com), and BZ Limited for failing to comply with Québec securities and derivatives legislation.
The Tribunal imposed a monetary administrative penalty of $2 million on the platform operators and, in order to protect the public, issued a series of orders that have the effect of banning them from Québec’s financial markets.
Specifically, the Tribunal ordered XT.COM Exchange, BZ Limited and any other person operating the website XT.com to permanently block access to the website effective two months after the decision date.
The Tribunal also ordered XT.COM Exchange and BZ Limited to inform users of the XT.com website, no later than two days after receiving notification of the decision, that the website will cease to be accessible to them effective two months after the decision date and that they must therefore withdraw any assets they have on the website and close their accounts as soon as possible.
XT.COM Exchange and BZ Limited acted as securities and derivatives dealers without holding any kind of registration with the AMF. They also distributed securities and created or marketed derivatives without preparing a prospectus subject to a receipt issued by the AMF, without benefitting from an exemption and without being qualified by the AMF.
In its decision, the Tribunal states that owners and operators of crypto asset trading platforms who act in contravention of securities legislation must be sent a clear message that this type of situation cannot be tolerated, as it exposes the public to significant risks. It adds that compliance with securities legislation is the only possible way forward.
“The Tribunal’s decision in XT.com is very important because it will become precedent for decisions in future cases involving the illegal trading of crypto assets through on-line trading platforms,” said Éric Jacob, Interim AMF Executive Director, Enforcement. “It also underscores the fact that it doesn’t matter where a platform is located, Québec or abroad: Québec securities and derivatives legislation applies to such platforms from the moment users are able to access them from Québec.”
The AMF will continue its offensive against crypto trading platforms that operate illegally in Québec and that have not entered into a pre-registration undertaking. This offensive is part of ongoing coordinated efforts by the Canadian Securities Administrators, which include the AMF, to enforce crypto trading platform compliance with Canadian securities and derivatives legislation.
Crypto trading platforms authorized to do business with Quebeckers are listed on the AMF website.
The Autorité des marchés financiers is the regulatory and oversight body for Québec’s financial sector.
Sylvain Théberge: 514-940-2176
Québec City: 418-525-0337
X (Twitter): @lautorite This link will open in a new window
LinkedIn: Autorité des marchés financiers (Québec) This link will open in a new window
- AMF institutes proceedings against two entities related to the XT.com crypto trading platform
- Canadian securities regulators strengthen oversight, enhance expectations of crypto asset trading platforms operating in Canada
- CSA provides update to crypto trading platforms operating in Canada
- Canadian securities regulators expect commitments from crypto trading platforms pursuing registration
- Canadian securities regulators outline expectations for advertising and marketing by crypto trading platforms
- Canadian securities regulators outline regulatory framework for compliance for crypto asset trading platforms
- Canadian securities regulators publish additional guidance for entities facilitating the trading of crypto assets
- Canadian securities regulators consult on regulatory framework for crypto-asset trading platforms