Crypto trading platform operating in B.C. illegally, securities watchdog says

CBC
·3-min read

A company operating a crypto trading platform branded as a "trusted" and "regulated exchange" has been violating British Columbia's securities laws and running an illegal exchange in the province, according to the B.C. Securities Commission (BCSC).

LiquiTrade Ltd., which is incorporated in the Cayman Islands, began operating a platform called LATOKEN in B.C. in 2020, the securities watchdog said, allowing users to trade popular digital assets such as Bitcoin and Ethereum.

LiquiTrade has never been registered under the Securities Act in B.C., the securities commission said in a report published this week.

At the heart of the matter is whether LATOKEN users are actually trading crypto on the platform.

It comes as authorities in Canada and around the world grapple with how to get crypto platforms to comply with legislation, says Peter Chow-White, a Simon Fraser University professor who extensively researches blockchain.

"It's a very complex space," he told CBC News Thursday. "Governments have really been struggling to figure out how to regulate this new decentralized financial system."

LATOKEN claimed to have more than a million traders in 2022.
LATOKEN claimed to have more than a million traders in 2022. (LATOKEN/Medium)

What is LATOKEN?

A LiquiTrade brochure markets LATOKEN as a "regulated exchange" and "top-40 most trusted exchange," according to the BCSC investigation.

In a January 2022 blog post, it claimed to have more than 1.5 million traders, more than one million downloads on Google Play and over $300 million in daily turnover.

A BCSC investigator made his own LATOKEN account, bought crypto and made trades, according to the commission.

He found that he didn't have control over his crypto assets. Instead, users have to request withdrawals from the platform.

"The investigator said he could not withdraw the crypto assets from the account except through the process provided by LiquiTrade, and he could not trade the crypto assets with another person except through the systems provided by LiquiTrade," the BCSC said in its report.

The commission found that LATOKEN users weren't, in fact, buying and selling crypto assets but buying rights to the crypto.

'Weren't actually trading Bitcoin'

"The assumption was that you weren't actually trading Bitcoin … but that you're trading some sort of image or a representation of it, but not the actual thing," Chow-White explained.

"This is a risky part of the space if they're not registered to deal with Canadian customers or British Columbia customers."

Germany's financial industry regulator also investigated LiquiTrade in 2022 and found the company is not authorized to conduct banking business or provide financial services in that country.

LiquiTrade did not participate in the BCSC hearing but was notified at every step of the process, according to the commission. The company did not make written submissions. CBC News reached out to LiquiTrade and LATOKEN but did not hear back.

The B.C. Securities Commission alleges 40 people were mislead into investing approximately $1.1 million.
The B.C. Securities Commission is now deciding what sanctions to impose on LiquiTrade. (CBC)

The BCSC is now deciding which sanctions to impose on the company, which could include fines and banning it from the market. The decision is expected to take months.

But Chow-White says regulators' powers are limited, noting that LiquiTrade wasn't present at the BCSC hearing.

"There are plenty of other exchanges that are global that don't operate under the same rules that we have in British Columbia," he said.

  • Up next
  • Up next
  • Up next
  • Up next

Latest stories

  • Royal Selangor Visitor Centre, Petronas Twin Towers and MinNature Malaysia rank top 25 best Asian tourist spots

    KUALA LUMPUR, July 6 — Three Malaysian destinations have been ranked in the top 25 best tourist attractions in Asia by o...

  • BNM: Co-pay health insurance an incoming ‘option’, not replacing current policies

    Insurers must start offering co-payment options from September 1 in addition to existing polices. Co-payments will n...

  • Why Stocks Are On Pace For A Historic Second Half

    Stocks recently finished a fantastic first half of 2024... and the best part is that there's more upside to come! So, it's not too late to take advantage of this bull run for the ages. Kevin Matras highlights several reasons why the market will continue to advance in the second half and beyond.

  • TD's chief compliance officer departs amid US anti-money laundering probe

    TD Bank's chief compliance officer has left the bank, according to a memo sent internally, at a time the Canadian lender faces U.S. regulators and the Justice Department in a probe related to its anti-money laundering program. Monica Kowal, who joined the bank in 2017, left the company this week, and will be replaced by Deputy Chief Compliance Officer Erin Morrow who will report to Chief Risk Officer Ajai Bambawale, according the memo sent in late June, seen by Reuters.

  • S&P 500, Nasdaq clock in new records after June's jobs data

    Friday's session marked across-the-board gains for all three of the major US indexes (^DJI, ^IXIC, ^GSPC) — the S&P 500 and Nasdaq Composite set new record highs to close out July's first trading week while the Dow Jones Industrial Average rose by 67 points. Market Domination Overtime hosts Josh Lipton and Jared Blikre recap the day's market and sector gains following the release of June jobs data this morning, commenting on certain drivers like speculation around the Federal Reserve's interest rate policies and the nearing US presidential election. For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime. This post was written by Luke Carberry Mogan.

  • Musk asks judge to dismiss shareholder lawsuit, argues delayed Twitter disclosure a ‘mistake’

    Elon Musk has asked a federal judge in New York to dismiss a lawsuit brought by shareholders of Twitter, the platform now known as X, arguing the delayed disclosure of his stake in the social media company was a “mistake.” The billionaire was sued by Twitter shareholders in April 2022 after revealing he had acquired…

  • Auto industry still on track for 'an electrified future'

    Automakers continue to report sales growth, prompting investors to question whether this trend can persist into the second half of 2024. Cox Automotive executive analyst and senior director of economic and industry insights Erin Keating joins Market Domination Overtime to discuss her outlook on the auto industry. Keating calls the auto industry's performance "pretty good" in 2024 despite economic uncertainty that pointed to a potential slowdown. Addressing the electric vehicle (EV) sector, she notes that "a lot of the decline" in the EV market "is coming out of the Tesla (TSLA) share," noting Tesla's former position as the sole competitor in the market. With more automakers transitioning to EV production, Keating doesn't believe that "EV demand is completely falling off a cliff." Instead, she describes the market as "normalizing," reflecting a more competitive landscape. Looking ahead, Keating tells Yahoo Finance that 'the automotive market will have to balance itself out." She forecasts increased consolidation and collaboration among automakers as the industry adapts to evolving dynamics. For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime. This post was written by Angel Smith

  • Fed is 'more focused' on core PCE than jobs data: Strategist

    The June employment report beat Wall Street projections, with the economy adding 206,000 jobs. RiverFront Global Fixed Income CIO Kevin Nicholson joins Market Domination to discuss the implications for markets and Federal Reserve policy. Nicholson has a muted response to the jobs data, noting there is "a lot of mixed data" in recent economic indicators. He emphasizes that the Federal Reserve is likely more focused on the core Personal Consumption Expenditures (PCE) index, forecasted to rise 0.21% month-over-month in June. "I think that's where their focus is going to be," Nicholson adds that the PCE print is "more important to the Fed than the Jobs report right now." Regarding his market outlook, particularly for bonds (^TYX, ^TNX, ^FVX), Nicholson predicts, "Right now, I think that the ten-year [Treasury yield] is pretty much range-bound between four and four and a half percent for the second half of the year." He dives into potential scenarios: "If we get the Fed to pull back and delay their rate cuts, we'll see the ten-year go back into that 4.35 to 4.50 range." However, he suggests that if the Fed implements rate cuts, the yield could potentially drop closer to 4%. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Angel Smith

  • ‘This is the worst we’ve seen’: why sales of new cars are crumbling

    The new car market is “crumbling” to all-time lows as drivers shun high costs and shift their attention to second-hand motors.

  • Americans' retirement savings surged by 19%: Vanguard report

    A recent report from the Vanguard Institute reveals a significant uptick in retirement savings, with average balances for American retirees increasing by 19% compared to 2022 data. Notably, more than four out of 10 individuals boosted their contribution amounts to their 401(k) accounts. Yahoo Finance personal finance contributor Kerry Hannon breaks down the study, examining the factors driving this positive trend in retirement savings. For more expert insight and the latest market action, click here to watch this full episode of Wealth! This post was written by Angel Smith

  • Nvidia downgraded to Neutral by New Street Research

    New Street Research analysts downgrade chipmaker Nvidia (NVDA) to a Neutral rating. Yahoo Finance Head of News Myles Udland joins the Market Domination team to discuss the analyst call. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Luke Carberry Mogan.

  • Time to Buy the Dip in Bitcoin ETFs?

    Bitcoin has been moving sideways following its halving event in April. Bitcoin - and potentially Bitcoin ETFs - may hit new highs by the year-end, analysts say.

  • 4.1% unemployment indicating 'slack' in US labor market

    June's jobs report is yet another sign pointing to the US job market cooling. PNC Financial Services Group chief economist Gus Faucher joins Market Domination to discuss the reading and what it means for the overall economy. "I read this report as being very positive. The job market continues to improve, but the pace of job growth is slowing towards a more sustainable pace over the longer run. We saw slower wage growth, which is reducing inflationary pressures from the labor market. But at the same time, wages are increasing more quickly than inflation. So household incomes are going up and the economy should continue to expand. So I think if you're at the Fed, this is what you want to see," Faucher explains. He notes that the unemployment rate at 4.1% indicates "a bit more slack in the labor market." He explains that the Federal Reserve is balancing the right time to cut without stoking inflation. He anticipates the Fed's first interest rate cut to come in November since they risk political criticism if they cut in September. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl

  • Labour is coming for your wealth – here’s where to escape their taxes

    Following Labour’s historic election win, many middle-class Britons have been left worried about what the new government will mean for their money – and are already rearranging their financial affairs accordingly.

  • Here's Why Investors Should Retain J.B. Hunt (JBHT) Stock Now

    Consistent shareholder-friendly initiatives bode well for J.B. Hunt (JBHT). However, lower revenues across segments and higher net interest expenses are likely to weigh on the company's bottom line.

  • Private Equity Giants Are Circling Bitcoin Miners on AI Allure

    Private equity firms are now looking at bitcoin miners in a much more different way after Core Scientific signed 200MW deal with CoreWeave in June, the company’s CEO said in an exclusive interview with CoinDesk.

  • Pound climbs after Labour's UK election win

    The pound advanced Friday after Britain's center-left Labour Party clinched an expected landslide election victory to end 14 years of right-wing Conservative rule.London's benchmark FTSE 100 index gave up early gains made following news that Keir Starmer would become Britain's new prime minister, after Labour trounced Rishi Sunak's Conservatives as Wall Street opened.

  • Police: Man sodomised by foreigner he met in PJ condo gym

    PETALING JAYA, July 6 — A local man has alleged he was sodomised against his will by a foreigner he met at the gym of th...

  • Umno veterans question low Chinese voter turnout at Sg Bakap

    KUALA LUMPUR, July 7 — The Umno Veterans Club today expressed concern over the low turnout of Chinese voters during the...

  • Malaysian film director Mansor Puteh dies, 70, dies in accident

    PETALING JAYA, July 7 — Film director and critic Mansor Puteh, 70, passed away after the car he was driving skidded and...