A cryptoasset trading platform domiciled in Dubai, which operated without a license in Quebec, was ordered to cease its activities and sentenced to a penalty of 2 million, following proceedings initiated by the Financial Markets Authority (AMF).
The decision of the Administrative Court of Financial Markets against XT.com Exchange and BZ Limited, which act as a single company, aims to pull the rug out from under the feet of those who illegally operate investment activities linked to cryptocurrencies .
“The administrative measures must absolutely send a clear message to operators and owners of crypto-asset platforms operating in Quebec and Canada that compliance with securities legislation represents the only possible avenue,” says the decision, which highlights “the shortcomings “Serious Securities Legislation” committed by the company.
“We are very satisfied with this important decision, which is part of the offensive that the Authority has been leading for several months against cryptoasset trading platforms,” commented AMF spokesperson Sylvain Theberge.
In 2022, the Ontario Securities Commission obtained a similar judgment against Mek Global and PhoenixFin Pte, a major player in the cryptoasset market that said it had 6 million users worldwide.
XT.com Exchange and BZ Limited, the companies identified by the AMF, have had an active website since 2018 which reportedly has 3 million users and numerous subscribers on social networks. According to the specialized site CoinmarketCap, this site is among the 10 largest in the world in terms of transaction volume.
Various investment services with attractive returns are offered by XT, such as contracts on cryptoassets and contracts on non-fungible cryptoassets, as well as derivative products linked to cryptoassets. The platform is not registered in Canada and does not have the necessary permits to carry out this activity, which contravenes securities legislation, the court ruled.
The AMF procedure was filed on March 30. Since then, XT.com said it had ceased its activities in Canada, but in fact, investors who already had an account could continue to make transactions, the AMF noted.
The decision just issued orders the blocking of the XT.com site within two months, to allow users to withdraw their assets and close their accounts. A notice to this effect must be published by the company for investors.
It is up to the Financial Markets Authority to ensure that XT.com complies with the judgment and pays the 2 million penalty imposed on it, which can be a challenge given the nature of the company’s activities .
Other remedies could be considered in the event of a repeat offense. Furthermore, another company, Coinex, is in the crosshairs of the AMF which continues the fight against illegal cryptoasset exchange platforms.