BCSC stated that Liquitrade operates the LAToken exchange without registration, facilitating illegal trading. The agency claims that users of the platform "did not actually buy or sell assets." Instead, they exchanged contractual rights for assets, which allowed them to request withdrawals in the future. BCSC concluded that the rights are derivative and the value is determined by the underlying crypto assets.
"In addition to the fact that Liquitrade was not registered in accordance with the Securities Act, the company contributed to the creation of a derivatives trading market and their promotion on the LAToken exchange. We have established that Liquitrade was operating as an exchange, but the company did not receive BCSC permission for this," the Canadian regulator said.
In November 2022, the British Columbia Securities Commission (BCSC) I warned you that the Cayman Islands-registered parent company LAToke has not received a work permit. BCSC advised Liquitrade representatives to visit its office on January 10, 2023, before the start of the hearings on the company's activities.
Liquitrade did not participate in the investigation, although BCSC sent notifications to the company. Now the agency intends to consider options for punishments for the exchange, which may include monetary fines or a ban on conducting market activities.
Last year, BCSC accused Vancouver-based non-functioning cryptocurrency platform ezBtc of $13 million in fraud. In 2020, the Securities Administrators of Canada (CSA) presented guidance according to which the country's cryptocurrency exchanges are subject to securities laws.