Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Blockchain, Crypto, Digital Assets, Tokens, CBDCs, Stablecoins, Metaverse, NFTs
“Crypto’s Back”, Stripe to Support On-Chain USDC Payments
Payments | April 26, 2024
Image: John Collision @Stripe Sessions - Future of Payments, San Francisco (04/24)
Stripe to Support On-Chain Global Crypto Payments
2024 - At Stripe Sessions - The Future of Payments conference in San Francisco, the Co-founder and President of Stripe, John Collision, announced its return to cryptocurrency transactions after a multi-year hiatus, this time supporting a single USDC stablecoin initially on Polygon, Solana and Ethereum networks. Stripe's history with cryptocurrencies showcases a journey of experimentation, adaptation, and strategic decision-making.
Here's a timeline of their key activities in the crypto payments space:
- 2014 - Stripe was one of the early adopters among payment processors to support Bitcoin payments. This move was aimed at enhancing the flexibility of online payments by integrating a burgeoning digital currency.
- 2018 - After four years of supporting Bitcoin, Stripe decided to end its Bitcoin payment support. The company cited several reasons for this decision, including longer transaction times and increased fees that made Bitcoin less effective for small, everyday transactions. Instead, Stripe shifted focus to look at other cryptocurrencies that could potentially offer more utility as everyday payment methods.
See: Stripe’s Total Payment Volume Passed $1 Trillion in 2023
- 2022 - Fast forward to 2022, Stripe introduced the ability for businesses to send cryptocurrency payouts globally through its Stripe Connect platform. This service initially allowed payouts in USD Coin (USDC), a stablecoin pegged to the US dollar, leveraging the crypto infrastructure without the volatility typically associated with traditional cryptocurrencies.
- 2024 - Renewed Crypto Payments Initiative: Just this week, Stripe announced that it would start accepting USDC stablecoin payments, marking a significant return to crypto payments expected to start this summer.
Crypto is back. @Stripe will start supporting global stablecoin payments this summer. Transactions instantly settle on-chain and automatically convert to fiat. Join the waitlist https://t.co/hws2OsU3Id and watch the demo (h/t @Solana) from Sessions. pic.twitter.com/zGKYW2FM6i
— John Collison (@collision) April 25, 2024
Stablecoins are gaining traction as a means of payment because they combine the stability of traditional fiat currencies with the efficiency of digital transactions.
See: How Permissioned DeFi Will Transform Global Payments
The appeal of stablecoins lies in their ability to maintain a stable value, usually pegged to a fiat currency like the US dollar, which makes them less volatile compared to traditional cryptocurrencies like Bitcoin. This stability is achieved through backing by assets such as cash or government bonds, ensuring that each stablecoin can be redeemed at a consistent value.
Why This Matters
Stripe's support for stablecoin payments will help the adoption of digital currencies into the mainstream. It also shows how Stripe is facilitating a deeper engagement with the crypto economy. Further, by choosing USDC, a stablecoin known for its stability and linkage to the US dollar, Stripe aims to build trust and reduce the volatility often associated with cryptocurrencies which could set a standard for other payment companies.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Consensys Sues the SEC Over Ethereum’s Status
Crypto Regulation | April 26, 2024
Consensys Takes Legal Action Against the SEC to Defend Ethereum's Ecosystem
As the regulatory landscape for cryptocurrencies tightens, Consensys, a key player in the Ethereum infrastructure, has taken a bold step by suing the U.S. Securities and Exchange Commission (SEC). This legal challenge is a significant development in the ongoing debate over the classification of Ethereum and the future of crypto regulations.
SEC’s Investigation into Ethereum
The SEC has been examining whether Ethereum qualifies as a security under U.S. laws, which affects its regulatory treatment and the approval of related financial products like ETFs, and has been a contentious issue. While no final decision has been publicly declared, the SEC has faced much opposition regarding its handling of Ethereum's classification with tensions raising after Ethereum's shift to a proof-of-stake model, which could be seen as altering its decentralized nature and thus impacting its classification under U.S. securities law.
See: Hester Peirce: Nothing but Crickets at the SEC
Former CFTC commissioner Brian Quintenz has noted that the SEC had previously acknowledged Ethereum as a commodity by allowing the creation of Ether futures ETFs. This action implied a non-security status for Ethereum, complicating the ongoing debates about its regulatory treatment. Meanwhile, the SEC continues to delay decisions on spot Ethereum ETFs, pushing these decisions to later dates, which adds to the uncertainty in the market regarding Ethereum’s regulatory status.
3/ If the SEC had any doubt about the regulatory treatment of ETH in Oct 2023, it wouldn’t have approved the ETF. If ETH were in fact a security, then the CFTC-listed futures contracts (on which the ETFs were based) would be illegal, as any derivative on ETH would be considered…
— Brian Quintenz (@BrianQuintenz) March 20, 2024
SEC Delays Spot Ethereum ETF Decision
Early this week, the SEC postponed its decision on Franklin Templeton's application for a spot Ethereum ETF. This delay is part of a broader pattern of hesitation by the SEC regarding cryptocurrency ETFs, underscoring ongoing regulatory uncertainty in the digital asset space. The decision has now pushed to June 11 according to The Block, reflecting the SEC's continued scrutiny of the regulatory implications and risks associated with crypto-based financial products. This postponement allows the SEC additional time to assess the potential for market manipulation and to ensure investor protection.
SEC Issues Wells Notice and Consensys Takes Legal Action
On April 10, 2024, Consensys received a Wells notice from the SEC, indicating potential enforcement action. This notice is a precursor to what could be a landmark decision on the regulatory status of Ethereum. In Response, Consensys is suing the SEC to challenge the regulatory body's authority and actions regarding the classification of Ethereum as a security.
Key Reasons for the Lawsuit
- Consensys disputes the SEC's potential classification of Ethereum as a security. The company argues that Ethereum, particularly with its decentralized structure and functionality, does not meet the traditional criteria set forth in U.S. securities laws, specifically the Howey Test, which is used to determine whether a particular transaction constitutes an investment contract.
See: Resurgence of Cryptoassets in Canada’s Investment Landscape
- Consensys believes that the SEC's approach is 'regulatory overreach' and could stifle innovation and the development of the blockchain and cryptocurrency industries. The firm asserts that the SEC's actions represent an overreach that could have detrimental effects on the broader ecosystem surrounding Ethereum.
- The SEC's reluctance or delays in approving Ethereum-based financial products, like ETFs. Consensys contends that the SEC's actions are not only hindering the adoption and mainstream acceptance of Ethereum but are also impacting various stakeholders who could benefit from such products.
- Through its lawsuit, Consensys seeks to obtain clearer and more favorable regulatory guidance that acknowledges the unique technological and economic aspects of Ethereum and similar decentralized platforms. This clarity is crucial for fostering growth and innovation within the sector without the looming threat of inappropriate regulatory interventions.
What Happens Next
The next steps in this legal and regulatory confrontation between ConsenSys and the SEC is likely to involve court proceedings, more market reactions, (hopefully) the SECs decision around the status of Ethereum ETFs, and potential appeals and further legal actions (which will further delay the legal uncertainty). Buckle up as the industry gears up for another challenge.
See: Canada to Enforce Cryptoasset Reporting by 2027
The lawsuit filed by ConsenSys will progress through the judicial system. This will include hearings, the presentation of arguments, and eventually a decision. The court's ruling could have significant implications not only for ConsenSys and Ethereum but for the broader cryptocurrency market regarding how digital assets are classified and regulated.
Why This Matters
Consensys’s lawsuit against the SEC symbolizes a critical resistance from the crypto industry against regulatory measures perceived as overreaching, and will be closely watched by all, with the outcome setting important precedents for how digital assets are regulated and classified.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Resurgence of Cryptoassets in Canada’s Investment Landscape
Survey Results | April 25, 2024
Image: Freepik
2023 Canadian Institutional Adoption of Crypto Assets
About the Survey: The latest 2023 Institutional Adoption of Crypto Assets survey conducted by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA) reveals increased adoption and innovative practices in digital currencies.
See: Investors Launch Argo Digital Gold to Tokenize Gold
The survey received 65 responses, including 31 from institutional investors and 34 from financial services organizations with operations in Canada. The institutional investors comprised a diverse group, including hedge funds, family offices, high net worth individuals, pension funds, endowments and foundations, as well as private equity and venture capital firms.
Cryptoasset Services Expand
- 2023 saw an uptick in financial institutions embracing cryptoassets, with 50% of survey respondents affirming their offerings of at least one type of cryptoasset service, a significant rise from 41% in 2021. This growth is attributed to a more robust regulatory framework and a rising inclination towards alternative asset classes.
- Cryptoasset trading surged, with 52% of financial services now providing this service.
- There was a marked increase in custody, clearing, and settlement services — from 33% to 48% — signaling an enhanced infrastructure to facilitate secure and efficient transactions.
- The quantitative trading sector witnessed the most dramatic increase, jumping from 11% in 2021 to 38% in 2023. This indicates a shift towards more sophisticated, data-driven investment strategies, reflecting an industry maturing in its approach to leveraging digital assets.
See: OSC: 2023 Canadian Crypto Survey Insights
- Conversely, there was a notable decrease in the provision of wealth management and financial advice related to cryptoassets, possibly reflecting a strategic realignment.
Kunal Bhasin, partner and co-leader of KPMG in Canada's Digital Assets practice:
"The last time we did this survey in 2021, it was a strong year for cryptoassets. The following year was a turbulent year, marked by fraud and collapses of major cryptoasset trading firms, but those events had a cleansing effect on the industry. Rising U.S. debt combined with increasing inflation likely provided a catalyst for the crypto rally of 2023, and it appears investors are looking for alternative asset classes that act as a debasement hedge and a reliable store of value. Our survey findings suggest cryptoassets are increasingly seen as an investible alternative asset class among such institutional investors and financial services organizations in Canada."
Institutional Investors Broaden Their Crypto Horizons
Institutional investors have expanded their exposure to cryptoassets. Nearly four in ten (39%) reported having either direct or indirect exposure in 2023, up from 31% in 2021. This growing interest is particularly pronounced in direct ownership, where 75% of institutional respondents now hold cryptoassets directly, a substantial increase from just 29% two years prior.
See: CSA Updates on Value-Referenced Crypto Assets Regulation
Investment strategies have diversified as well, with a significant uptick in the adoption of derivatives and crypto-related public equities. Exposure through derivatives has seen a remarkable rise, from 14% in 2021 to 42% in 2023, offering investors tools for hedging, speculation, and accessing the market in a risk-managed manner. Similarly, investments in crypto-related public equities have escalated, reflecting a strengthened confidence in the crypto market's integration with traditional financial systems.
Looking Forward
The cryptoasset market in Canada is positioned for continued growth, with supporting regulatory actions and increasing institutional acceptance. Innovations such as the approval of spot Bitcoin ETFs in the U.S., and anticipated Ethereum ETFs signal a maturing market ready to offer more diversified and secure investment opportunities.
See: Chainlink Transporter Launches: Secure Cross-Chain Crypto Bridging
As Canadian financial institutions and investors increase interest, the emphasis will likely remain on education, strategic investment, and the development of robust infrastructures to support these digital assets. The integration of cryptoassets into mainstream portfolios suggests that investors recognize their potential to reshape investment strategies amidst a digitally transforming world. The insights from the 2023 survey sums up Canada's approach to cryptoassets — from cautious observation to proactive engagement.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CSA Updates on Value-Referenced Crypto Assets Regulation
Crypto Regulation | April 25, 2024
Image: Freepik/frimufilms
Canadian Regulators Extend Deadline for value-referenced crypto assets (VRCA) Compliance to October 31, 2024
Canadian securities regulators recently updated their interim approach to the regulation of VRCAs, which are designed to maintain stable values by referencing fiat currencies or other assets. This update, important for both crypto trading platforms and investors, underscores ongoing efforts to harmonize crypto regulation across Canadian territories and provinces.
See: Canada to Enforce Cryptoasset Reporting by 2027
- VRCAs aim to achieve stability through backing by fiat currencies or a combination of other assets. These include fiat-backed crypto assets (FBCAs), which replicate the value of currencies like USD or CAD through adequate reserve holdings by the issuer.
- As per the Canadian Securities Administrators (CSA), registered crypto trading platforms, or those with a pre-registration undertaking, were initially set an April 30, 2024 deadline to comply with the terms allowing the trading of FBCAs. However, due to technical challenges expressed by platforms, this deadline has been extended to October 31, 2024.
In Closing
The CSA continues to caution investors about the inherent risks associated with crypto assets, even those meeting regulatory standards. They emphasize that compliance with interim terms does not equate to endorsement or a guarantee of safety.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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DOJ Wants Changpeng Zhao Sentenced for 3 Years
Crypto | April 24, 2024
Image: Freepik/rawpixel.com
U.S. Federal Prosecutors Want Changpeng Zhao Sentenced to 3 Years (Double the Guideline)
The founder of Binance, Changpeng Zhao (CZ) is scheduled to be sentenced on April 30 for pleading guilty to a raft of violations under the Bank Secrecy Act. Per the federal guidelines, it was expected that CZ was facing up to 18 months of prison time (or more). Yesterday April 24, 2024 prosecutors filed a memo recommending that CZ be sentenced to 3 years in jail and pay a $50 million fine.
See: Changpeng Zhao Launches Educational Platform Giggle Academy
- Federal prosecutors are advocating for double the 'high end' of the sentencing guidelines suggesting that it’s essential to not only hold him accountable for the wide range of charges including non-compliance of anti-money laundering laws but also to deter global crypto leaders and send the message that there will be severe consequences for abusing U.S. financial regulations for personal and corporate gain.
- Zhao has garnered substantial support through over 160 letters from various stakeholders, including industry leaders and academics, calling for leniency in his sentencing. These letters emphasize his prior contributions to the tech and financial sectors and his philanthropic endeavors.
- Documents reveal that Binance processed transactions worth trillions and violated multiple U.S. regulations, affecting national security interests. The proceedings have led to Zhao facing a longer sentence than the 18 months originally agreed upon in his plea deal.
- Adding to Binance’s legal woes, another executive, Tigran Gambaryan, is currently detained in Nigeria, facing charges of tax evasion and fraud. This situation highlights broader regulatory challenges and legal risks facing company leaders globally.
See: Canadian Investors Lead Class Action Against Binance Canada
"A custodial sentence of 36 months — twice the high end of the Guidelines range — would reflect the seriousness of the offense, promote respect for law, afford adequate deterrence, and be sufficient but not greater than necessary to achieve the goals of sentencing," - U.S. Prosecutors
In Closing
The global fintech community will be watching closely, as the outcomes could set significant precedents for the treatment of legal infractions in the sector.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The Emergence of Insurtech Solutions for DAOs
Insurance for DAOs | April 23, 2024
Image: Freepik
Decentralized Autonomous Organizations and the Need for Specialized Insurance
Decentralized Autonomous Organizations (DAOs) represent a novel form of organizational structure built on blockchain technology, characterized by decentralized governance and operation without traditional management hierarchies. While DAOs offer numerous advantages such as transparency and global collaboration, their unique nature also presents significant risk management challenges. Traditional insurance products often fall short of addressing the specific needs of DAOs, which include smart contract vulnerabilities, regulatory uncertainties, and operational risks to name but a few.
See: Solid World, KlimaDAO, and SCB Group Unite for a Sustainable Future
As the blockchain and cryptocurrency domains continue to evolve, so too does the insurtech industry, which has begun tailoring solutions to meet the needs of these digital-first entities. This segment of the insurance industry focuses on leveraging technology to solve the challenges faced by crypto-native organizations, including DAOs, which have been largely underserved by conventional insurance markets.
Now let's look at a couple of DAO tailored offerings:
1. REBA Solution by Fenwick
Fenwick's REBA Solution offers pioneering insurance products designed explicitly for DAOs and similar organizations. It incorporates a corporate structure that protects the DAO's key figures such as founders, directors, and officers, and also covers the token holders involved in DAO governance. This comprehensive coverage is critical as it ensures that all parties involved in the DAO are protected from potential liabilities and risks associated with their governance roles.
The REBA Solution offers several key benefits to DAOs, significantly enhancing their risk management framework:
- It provides a safeguard against potential litigation and regulatory challenges, which are common in the rapidly changing landscape of blockchain technology. For instance, a DAO could be threatened with a lawsuit due to an unforeseen loophole in its smart contract system. Here, REBA could step in to provide the necessary legal defense funds and coverage for any liabilities incurred, demonstrating its utility in real-world situations.
- It covers operational risks, so that REBA helps DAOs mitigate issues that could arise from the decentralized and often anonymous nature of their operations.
- Their solution is designed to be flexible, accommodating the evolving nature of DAOs and the blockchain industry at large.
2. UnoRe's Insurance Products for DAOs
UnoRe is a pioneering force in the decentralized insurance market, specifically tailored to meet the unique needs of Decentralized Autonomous Organizations (DAOs) and other crypto-native entities. In their insightful article, "Changing The Paradigm In DAO Asset Management: The Role of Insurance," UnoRe discusses how their innovative insurance solutions are empowering DAOs to manage assets with greater confidence and security.
See: Sounds like a DAO, Looks like a DAO: Introducing the Modern Digital Organization
They highlight the critical role of decentralized insurance in enabling DAOs to transition from just storing assets to actively investing them, thereby generating substantial returns while minimizing risks. This approach not only enhances asset management strategies for DAOs but also improves investor confidence in DeFi markets.
- Provides protection for DAOs that stake Ethereum as validators, covering the risk of slashing where validators might be forcefully removed from the network, resulting in a loss of staked assets. This insurance product allows DAOs to earn from staking while minimizing risks, offering a potential ROI of 3.36% after insurance costs.
- Covers risks associated with vulnerabilities in smart contracts, which DAOs heavily rely on for operations in the DeFi space. This cover aims to protect the DAOs’ investments in various DeFi protocols like staking, lending, and yield farming from exploits that could lead to significant financial losses.
- Protects DAOs against the depegging of stablecoins, which can significantly impact the treasury if invested in stablecoins like USDC, DAI, and uDAI. This cover provides confidence for DAOs to invest in stablecoins without fearing a repeat of incidents like the TerraUSD depegging event.
- Offers protection against risks associated with third-party custodians, safeguarding DAOs’ assets from losses that might occur due to issues like the collapse of major platforms (e.g., FTX).
See: InsurAce Founder at DeFi Insurance Protocol Explains the Difference between Traditional and Decentralized Insurance
According to UnoRe, their insurance platform has distributed over $10 million in coverage across a diverse range of crypto protocols and maintains an active capacity exceeding $4.4 million. They have underwritten risk for more than 85 different protocols and six stablecoins through our B2C Insurance Sales dApp, known as The Cover Portal.
Legal and Regulatory Consideration
The insurance framework for DAOs like REBA or UnoRe must navigate complex legal and regulatory environments. These products are often established in jurisdictions favorable to cryptocurrency enterprises, such as Bermuda, which offers a regulatory framework supportive of innovative insurance solutions.
Having said that, Wyoming recently passed the DUNA Act, a comprehensive legal framework formalizing DAOs within its legal structure. The DUNA Act aims to provide clarity and security for DAOs, addressing various legal aspects to foster their integration into mainstream business environments. This legislation not only enhances the operational legitimacy of DAOs but also positions Wyoming as a hub for blockchain innovation and a model for other jurisdictions considering similar regulatory approaches.
See: 5 Ingredients to Cook Up Your Own DAO
Understanding these legal contexts is crucial if setting up and operating a DAO, and when selecting an insurance provider. Learn more
Outlook
The future of DAO insurance is looking more promising as more insurtech companies recognize the need for tailored solutions. The growth of such insurance models is likely to grow alongside the expansion of the DAO ecosystem itself, reflecting broader acceptance and integration of blockchain technologies across different sectors. As these solutions become more refined and widespread, they will help legitimize and stabilize DAOs as a viable alternative to traditional organizational structures.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canadian Investors Lead Class Action Against Binance Canada
Binance | April 23, 2024
Image: Freepik
Binance is facing a class action lawsuit from Canadian investors seeking damages and recission
- Binance (Binance Holdings, Binance Canada Capital Markets, and Binance Canada Holdings) is facing a class-action lawsuit in Ontario, Canada for selling crypto derivatives to retail investors without proper registration, a violation of local securities laws.
- On April 19, 2024, Ontario's Superior Court (a different 'OSC') published the motion and provided a detailed analysis of whether the sale of cryptocurrency derivatives by Binance constituted a sale of securities under the law, emphasizing the complexity and risks associated with these products.
See: U.S. Court Orders Binance CZ to Surrender Canadian Passport
- The motion highlighted that a large portion of Canadian crypto asset owners are retail investors, with over half owning less than $5,000 in the market, a vulnerable demographic to risks associated with non-compliance by platforms like Binance. The motion was certified as a class action, allowing it to proceed on behalf of all affected Canadian investors.
- The plaintiffs who initiated the lawsuit to be Christopher Lochan and Jeremy Leeder, are seeking damages for the losses incurred due to Binance’s alleged illegal activities. They are also asking for rescission of the transactions, which would effectively annul the contracts made under these conditions and potentially refund the investors.
"The sale of a cryptocurrency derivative has been held to be a sale of an 'investment contract' and, therefore, of a security within the meaning of section 1(1) of the OSA. A person or company must be registered under Ontario securities law to engage in the business of trading in securities unless an exemption applies."
What Happened?
The broader regulatory environment in Canada became more restrictive after the Canadian Securities Administrators (CSA) introduced new guidelines in February 2023 outlining enhanced investor protection expectations for crypto platforms. These guidelines were especially stringent regarding the handling of stablecoins, requiring crypto exchanges to obtain prior approval before allowing customers to buy or deposit stablecoins. The approval process involved due diligence checks that Binance was unwilling to do, citing the unfeasibility of these new regulations.
See: Binance Withdraws from Canadian Market due to Tightened Crypto Regulations
Following warnings from the Ontario Securities Commission (OSC), despite its significant market share and influence in the global cryptocurrency market, Binance announced its decision to exit the Canadian market in May 2023. Despite declaring an end to its services in Ontario, the platform remained accessible to some residents, leading to increased regulatory interventions.
In Closing
If Binance does not respond to the lawsuit, the court may issue a default judgment in favor of the plaintiffs. This would mean that the court accepts the claims of the plaintiffs as uncontested, potentially leading to a legal order for Binance to pay damages or fulfill other remedies sought by the plaintiffs without Binance’s input in the decision.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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