Canadian Regulator Fines Bybit, KuCoin For Securities Law Violations

The Ontario Securities Commission said foreign cryptoasset trading platforms must play by the rules, or face enforcement action

article-image

Nathan Phillips square, near the OSC, Toronto, Canada; Source: Paolo Costa Baldi, CC BY-SA 3.0, via Wikimedia Commons

share

key takeaways

  • “Unlike KuCoin, Bybit responded to the OSC’s enforcement action,” the OSC said
  • KuCoin is barred from operating in Ontario, while Bybit continues to work on registration

The Ontario Securities Commission (OSC) has hit two foreign cryptocurrency exchanges with enforcement actions after finding they failed to comply with securities laws there. KuCoin has been banned from operating in the Ontario province, while Bybit agreed to pay a fine as it works with the authority to register appropriately.

“Bybit and KuCoin both operate unregistered cryptoasset trading platforms and allowed Ontario investors to trade securities without a prospectus or any exemption from the prospectus requirements,” the regulator said in a statement on Wednesday.

KuCoin, based in Seychelles, has been ordered to pay an administrative penalty of about C$2.1 million ($1.6 million), including investigative charges. Meanwhile, Singapore-based Bybit has reached a settlement with the regulator for about $2.5 million.

“Foreign cryptoasset trading platforms that want to operate in Ontario must play by the rules or face enforcement action,” Jeff Kehoe, OSC’s enforcement director, said. 

Bybit has agreed to continue working with the OSC to register its platform. In the event that registration talks fail, the exchange will close its operations with Ontario, the regulator said. 

“Unlike KuCoin, Bybit responded to the OSC’s enforcement action, maintained an open dialogue, provided requested information, and committed to engaging in registration discussions,” the regulator said.

Existing Bybit retail customers in Ontario will be asked to close their positions in some restricted products involving leverage, margin or the extension of credit. The exchange told Blockworks this week it’s looking to cut employee headcount by removing overlapping functions. 

The penalties come a little more than a year after the Canadian regulator warned exchanges operating in Ontario to contact the OSC by April 19, 2021 for registration or face enforcement action.

“Despite this warning, Bybit and KuCoin did not contact the OSC by the deadline and continued operations in Ontario,” the regulator said.

Authorities have been keeping a closing eye on cryptocurrency products as interest grows in the relatively nascent investment space. Earlier this year, crypto lender BlockFi agreed to pay $100 million in penalties to the Securities and Exchange Commission over allegations it illegally offered a high-interest yield product. 

The rulings could lead to hesitation among North American investors to invest in cryptoassets as a result of the jurisdiction’s harsh regulatory framework, according to Sheraz Ahmed, managing partner at STORM Partners. 

He thinks the exchanges themselves won’t be too concerned about financial penalties, as they have been operating successfully for years. “Fines are always preferable to complete bans, and sometimes it is better to ask for forgiveness than permission,” he said.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Trump’s tariffs may have potentially significant impacts on GDP, household spending and food prices — if they hold

article-image

The Binance-affiliated stablecoin lost about $200M of market capitalization

article-image

How the Bitcoin conversation has evolved since the price was less than $1

article-image

The platform also rolled out 13 tokenized funds for institutions on the Connect platform

article-image

The company’s expanded lineup introduces new ETF products, as more and more issuers get into crypto funds

article-image

President Donald Trump announced a 10% levy on almost all goods and additional tariffs on so-called “worst offending” countries