Canadian Regulator Probe Determines That Liquitrade Operates an Illegal Crypto Exchange

Exploring Liquitrade: Contractual Rights vs Crypto Assets

The British Columbia Securities Commission (BCSC) said its investigation into Liquitrade’s crypto asset trading platform found that the company operated an illegal exchange. The probe also determined that users were trading contractual rights, not crypto assets, as the platform had claimed.

Latoken Users Trading Derivatives, Not Crypto Assets

On July 3, the British Columbia Securities Commission (BCSC) announced that Liquitrade Ltd. operated Latoken without registration, effectively running an illegal exchange in the province. The BCSC said a panel investigating the operator found that users of the crypto asset trading platform “didn’t actually buy and sell assets.”

Instead, users traded contractual rights to the assets, which allowed them to request future withdrawals. The panel concluded these rights were derivatives, deriving their value from the underlying crypto assets. The BCSC statement added:

“The panel found that Liquitrade, despite not being registered under the Securities Act, facilitated trading by several means, including creating a derivatives trading market and promoting derivatives that trade on LATOKEN. The panel also found that LiquiTrade was operating as an exchange. But it was not authorized to do so by the BCSC, as required by the Act.”

BCSC Considers Sanctions for Liquitrade

Meanwhile, before issuing its latest statement on Liquitrade’s Latoken platform, the British Columbia Securities Commission (BCSC) warned in November 2022 that Latoken’s parent company, incorporated in the Cayman Islands, was not recognized by the Commission. At the time, the agency told Liquitrade’s representatives to visit its offices on January 10, 2023, just before a hearing into its activities began.

However, according to CNBC, Liquitrade failed to participate in the investigation as requested, although the BCSC kept it notified throughout the process. The BCSC’s panel will now consider punishment, which may include monetary penalties or market participation bans, the Commission said.

Source: Bitcoin

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