The British Columbia Securities Commission (BCSC) has found LiquiTrade guilty of operating an illegal exchange in Canada. The panel's findings could lead to significant sanctions, including fines and a potential ban on LiquiTrade's operations.

Investigation Findings:

- Initial Accusation: In November 2022, LiquiTrade's Latoken crypto exchange was accused of violating Canada's Securities Act by processing $300 million in daily transactions for its 1.5 million users.
- BCSC Panel Decision: After nearly two years of investigation, the BCSC panel concluded that LiquiTrade violated Canadian securities legislation. The panel stated, "LiquiTrade has never been registered in any capacity under the Act, and there is no recognized exchange or clearing agency in British Columbia operated by LiquiTrade or using the name LATOKEN."

Violations and Requirements:

- Unregistered Operations: LiquiTrade enabled users to trade contractual rights of underlying crypto assets considered derivatives investments without being registered under the Securities Act.
- Unauthorized Exchange Operations: The panel found that LiquiTrade was operating as an exchange without BCSC authorization, as required by the Act.

Sanctions and Timeline:

- Potential Sanctions: LiquiTrade could face monetary penalties and a ban on its services.
- Finalization Date: Sanctions on LiquiTrade will be finalized by August 14, 2024.

Context and Industry Impact:

- Previous Bans: As of March 2024, Canada has banned four crypto exchanges, including Catalyx, KuCoin, Poloniex, and xt.com exchange.
- Authorized Platforms: Fifteen crypto trading platforms, including Bitbuy, Coinbase, and Fidelity, are authorized to operate in Canada.
- Industry Perspective: Dean Skurka, CEO of Canadian crypto asset platform WonderFi, noted a resurgence in retail interest in crypto, with new signups spiking alongside Bitcoin hitting new all-time high prices.

The BCSC's decision to sanction LiquiTrade underscores Canada's stringent regulatory stance on unregistered crypto exchanges. While unregistered platforms face crackdowns, licensed trading platforms continue to thrive, reflecting a growing public receptiveness to crypto investments.