OSC ordered to pay Binance $15k after ‘unreasonable’ probe request
The Ontario Court of Appeal in Canada ruled in favor of Binance, declaring the Ontario Securities Commission's (OSC) demand for internal communication documents from Binance as 'overbroad' and 'unconstitutional,' violating the Canadian Charter of Rights and Freedoms. The OSC had requested all communications related to Ontario or Canada dating back to January 2021 as part of an investigation into whether Binance breached securities laws. The court ordered the OSC to return seized documents to Binance and pay $15,000 in costs. While this ruling limits the scope of OSC's request, it does not stop the OSC from continuing its probe with a more targeted approach. The OSC has a history of strict regulatory actions against crypto firms, leading several major exchanges, including Binance, to exit the Canadian market due to regulatory challenges.
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Canadian Court Rules Against OSC in Binance Case
A Canadian Court of Appeal ruled in favor of Binance in a case involving the Ontario Securities Commission (OSC)’s request for document production that the court deemed 'unconstitutional.'
OSC Overstepped Authority
The Ontario Court of Appeal declared that the OSC overstepped its authority by demanding Binance to provide communication documents dating back to January 2021. According to court documents, the OSC's summons was deemed 'overbroad' and violated protections under the Canada’s Charter of Rights and Freedoms. The court ordered the OSC to return the seized documents to Binance and pay $15,000 to the exchange as part of the court costs.
Background of the Investigation
In 2024, the OSC began investigating Binance to determine whether its services violated securities laws in Ontario. The OSC requested Binance to produce all communication records regarding Ontario or Canada dating back to January 2021. Binance challenged this request, describing it as “overbroad” and “unconstitutional,” arguing that the summons would require producing years of internal emails and discussions unrelated to the investigation.
Court’s Judgment on Overreach
The Court of Appeal sided with Binance, stating that the OSC’s request was 'overbroad' and resembled a 'fishing expedition' rather than a focused investigation. Judges found the OSC’s actions failed to narrow its request to materials reasonably relevant to the case. Consequently, the court deemed the summons unconstitutional and instructed the OSC to return documents obtained via the invalid order.
Future Implications for OSC Investigations
The ruling, however, does not prevent the OSC from continuing its investigations into Binance. The court clarified that the OSC can issue more reasonable and targeted summons that align with constitutional standards for regulatory inquiries.
OSC’s History with Crypto Firms
The Ontario Securities Commission has a history of taking action against crypto firms for non-compliance with local regulations. In 2022, the OSC penalized Bybit with CAD 2.5 million in a settlement for operating without a license and subsequently forced Bybit to exit the Canadian market. Similarly, KuCoin and other exchanges like Gemini, OKX, dYdX, and Binance exited the market due to the complexity and costly nature of Canadian regulations, which many firms found unsustainable to comply with.