canada - Pwim.Net

Binance Faces Lawsuit in Canada for Selling Crypto Derivative Products Without Registration

Binance, the leading players in the cryptocurrency trading industry, has been hit with a class-action lawsuit in Canada. The Ontario Superior Court of Justice has given the green light to the lawsuit, which alleges that Binance violated securities laws by selling crypto derivative products to retail investors without proper registration [1].

The plaintiffs, represented by Christopher Lochan and Jeremy Leeder, argue that Binance’s actions were in violation of the Ontario Securities Act and federal law. They claim that Binance failed to register as required by securities law and neglected to file a prospectus for the derivative products it sold to Canadian investors [2].

The certification motion for the class-action lawsuit highlights the significant presence of retail investors in cryptocurrency derivatives trading in Canada. According to the Ontario Securities Commission (OSC), over 50% of Canadian crypto owners hold at least $5,000 worth of cryptocurrency [2]. This underscores the potential impact of the lawsuit on a large number of investors.

The plaintiffs seek damages and the rescission of the unlawful derivatives trades conducted on the Binance platform. They argue that Binance’s failure to comply with registration requirements and file a prospectus renders the sales illegal and voidable [2].

Regulators have previously classified crypto contracts as securities or derivatives, bringing the marketing of such contracts under securities law. This classification has led to increased scrutiny of platforms like Binance, which offer crypto derivative products to retail investors [2].

Binance’s history with Canadian investors has already attracted regulatory attention. Despite previous pledges to cease doing business with local investors in 2021 and agreements with the Ontario Securities Commission (OSC) in 2022, Binance is still under investigation for possible violations [2]. The outcome of this lawsuit could have significant implications for the cryptocurrency industry, particularly in terms of regulatory oversight and investor protection.

It is estimated that tens of thousands of Canadian users were affected by Binance’s alleged violations. The plaintiffs argue that Binance’s actions not only violated securities laws but also had a direct impact on retail investors who purchased the crypto derivative contracts from the platform starting on September 13, 2019 [3].

Image source: Shutterstock

Department of Homeland Security (DHS) Trials Blockchain Solution for Canadian Borders

The DHS has implemented a number of rapid POC projects to investigate the usefulness of blockchain in border management.

In a novel and innovative approach, the DHS is working directly with trade members from the Commercial Customs Operations Advisory Committee (COAC) working group, including customs broker Customs Direct LLC. In this role, Customs Direct has partnered with blockchain developer Morpheus.Network to fast track the technical evaluation of blockchain as a key factor in improving efficiencies on border management.

Dan Weinberger, CEO of Morpheus.Network welcomes the evaluation by DHS. “We have trialed our secure blockchain technology across a number of supply chain sectors. We are confident that we can deliver simple-to-use yet trusted solutions for different areas of border management. “

The first POC investigated free trade in the context of the North American Free Trade Agreement (NAFTA). The DHS and Customs Border Protection (CBP) opted for a less formal but much more rapid approach by seeking POC participants directly from the COAC working group. Selected member Customs Direct, with its Morpheus.Network partner, worked through the POC and applied their experience to show the benefits of Distributed Ledger Technology.

Jim Masloski, CEO of Customs Direct praised the approach taken by the DHS. “I’ve more than 30 years’ experience in custom brokerage and it is a complex area compounded by many touchpoints and legacy infrastructure. By adopting a rapid evaluation process the DHS can make decisions based on technology that is available today. This is a game-changer for supply chain transparency.”

The initial POC looked at benefits that could be realized by utilizing blockchain with NAFTA/CAFTA claims and was conducted in September 2018 by CBP’s Office of Trade, Trade Transformation Office, (TTO), Business Transformation and Innovation Division (BTID).

This evaluation ran for six months and concluded in October with a successful outcome. So emboldened, the DHS initiated a second POC, this time in Intellectual Property Rights (IPR) which is expected to be concluded in the coming weeks.

The IPR Blockchain POC will assess the agency’s ability to facilitate shipments by aligning right’s holders and licensee(s) to the entry for an improved importation experience. The live fire system test is anticipated to occur in September 2019. A 360-degree assessment looking at policy, operations, and legal and technical aspects of the Blockchain technology will be conducted following the POC.

The effect of this ‘live fire testing’ has been beneficial to the DHS as it can actively investigate the technical options without deploying overly laborious or time-consuming tender based processes.

The official response to the projects has been very positive. Documents released by the COAC note that the aim of utilizing blockchain technology for CBP is to improve the processing of trade-related documents by hosting information about trade transactions on a decentralized, tamper-proof distributed ledger system, which can be authenticated and accessed by various stakeholders.

Supply chain issues

In a typical supply chain, there are over 40 points of contact between different entities. Something as simple as sending a bulk shipment of flowers internationally can generate over 200 hard copy documents from more than a dozen sources. Each handling point is susceptible to human error: Misfiling, late documentation, lost packages, slow payments, etc. which can delay or halt the entire shipment. In addition, there is a huge issue of counterfeit goods and the lost revenue cost to genuine manufacturers. These are massive pain points causing lost time and revenue.

Removing the inefficiencies in supply chain will stimulate economic growth through the reduction of barriers to global trade. It is estimated by the World Bank in 2018 that reducing these barriers could result in increased global GDP by $2 trillion.

Weinberger commented: “The global supply chain sector encompasses incredibly complex systems and yet many of the processes are still analog and require physical delivery of documentation. We can leapfrog these antiquated, and largely inefficient, systems and use distributed ledger technology to securely automate end-to-end supply chains including handover and back-office procedures. The result is to increase speed, improve accuracy and reduce costs. Overall we can bring the supply chain customer experience into the 21st Century.”

Masloski concluded: “Our partnership with Morpheus.Network works really well. We understand border management and they understand the technology to support it. Together we can assist the DHS and CBP optimize cross border activity, reduce fraudulent activity and keep costs down. We look forward to delivering more valuable solutions.”

Image via Shutterstock

Canada to Become the Global Leader in the Blockchain Industry, Report Indicates

In a recently published report by the Canadian Chamber of Digital Commerce, showed that Canadians in the blockchain industry are amongst the highest paid professionals in the country. The report also noted that Canadian blockchain companies want more legal clarity, to understand where their government stands regarding cryptocurrency regulation in Canada.

The study was conducted by the Blockchain Research Institute (BRI) with support from Accenture and collected data from more than 150 participants in the blockchain and cryptocurrency sector.

The report stated that the average salary of a “blockchain worker” in Canada in 2018 was almost nearly double the Canadian national wage average. Notably, the blockchain community has been active in the past few years to educate policymakers regarding the state of the blockchain ecosystem. According to the report, blockchain entrepreneurs emphasized the lack of legislative definitions and the inconsistency for categorizing and understanding the differences between digital assets from securities.

Senator Deacon said:

“Our regulators are working to manage important risk factors like consumer protection, privacy and confidentiality, financial crime, and financial stability. This is really important.”

Tanya Woods, the managing director of the Chamber of Digital Commerce Canada, stated:

“There is an opportunity, and arguably a national mandate, to manage important risk factors beyond the mandates of securities regulators. In provinces, we need to see various departments of finance and innovation take pro-growth positions to support the non-securities aspects of digital assets and blockchain technology.”

The blockchain community in Canada has acknowledged the need for a more blockchain education for the public as well as all levels of the government to support future progress.

Image via Shutterstock

Canada’s Central Bank Considers Launching a Digital Currency to Combat the “Direct Threat” of Cryptos

Canada’s Central Bank, the Bank of Canada, is considering launching a digital currency that would enable the collection of data on how Canadians spend their money.

The two-year research findings

The Bank of Canada prepared a presentation for Stephen Poloz, the Governor, and the bank’s board of directors. During the internal presentation, members of the bank provided detailed public insight into the bank’s plans on a proprietary digital currency.

The presentation, “Central Bank Money: The Next Generation,” was prepared by Stephen Murchison, Poloz’s advisor, and was assigned to lead the bank’s digital currency research. The two-year research project on digital money was to determine whether the bank should issue its own digital currency.

Presented by Murchison, the research concluded that launching a central bank-issued digital currency would offer “all the benefits” of a central bank-backed asset, and also “all the convenience and security of wireless, electronic payments.” Listing over a dozen benefits, including “an additional payment method could make the payment system more robust,” the only limitation is that a digital currency “also presents a risk to stable, low-cost funding for (banks) (deposits).”

The digital currency

“We need to innovate to stay in the game,” the presentation states, while also suggesting that a digital currency could come with the option to pay interest on balances. The ability to collect more information on how Canadians spend money will also be made more convenient, while the presentation also highlights that “personal details not shared with the payee, but could be shared with police or tax authorities.”

The two deployment options for the digital currency are either token-based or account-based. As banknotes are becoming obsolete as a means of payment, while creating inefficiencies for the banking system, the presentation reads, “the time may come that merchants/banks find it too costly to accept banknotes.”

Concerns over the implications of digital money

The presentation further added that if banknotes become too costly for banks, “ordinary Canadians would lose access to central bank money.” However, the rise of cryptocurrencies will threaten the bank’s ability to carry out monetary policies and act as a lender of last resort.

Global regulators and central bankers have been concerned over the implications of digital money, since the announcement of Libra and news of China launching its own digital currency. Gathered in Washington D.C., global regulators and central bankers, including representatives from Canada, attended the annual joint World Bank/ International Monetary Fund meetings to discuss the future of finance.

Image via Shutterstock

Canadian Investment Fund Manager Receives ‘Favourable Ruling’ From Regulators to Offer Bitcoin Fund

Canadian investment fund manager 3iQ Corp. announced on Oct. 30 that it had received approval from its public hearing by the Ontario Securities Commission (OSC) for a closed-end Bitcoin fund that will be listed for trading on a major Canadian stock exchange.

3iQ announced that it had received a “favourable ruling” from the OSC for “The Bitcoin Fund,” which is a non-redeemable investment fund expected to be listed by the end of the year.

“Over the past three years, we have worked actively with the OSC’s Investment Funds and Structured Products Branch to create an investment fund that we hope will allow retail investors the benefits of investing in Bitcoin through a regulated, listed fund,” said Fred Pye, President and CEO of 3iQ. “We have addressed the questions of pricing, custody, audit, and public interest issues in a regulated investment fund.”

Gemini Trust Company LLC, a trust company based in New York, has been appointed as the fund’s custodian. “3iQ has carefully selected a team of professional partners with expertise in the digital asset industry to construct a safe and secure fund product for the Canadian market, and we are excited to be selected as their custodian,” said Cameron Winklevoss, President of Gemini.

Support for 3iQ has also extended to the development of an innovative Bitcoin benchmark from VanEck’s MV Index Solutions, which is a regulated index provider and leader in developing cryptocurrency indices and data series.

Howard Atkinson, Chairman of 3iQ said:

“We look forward to offering retail investors exposure to this exciting new asset class within registered and traditional investment accounts. The performance and professionalism of our legal team at Osler and our audit team from Raymond Chabot Grand Thornton (RCGT) was critical to getting support from the panel.”

Image via Shutterstock

Canadian Crypto Exchange Shuts Down to Protect Customers

In Vancouver, Canada, another cryptocurrency exchange has closed down. This is not the first Canadian based Exchange to encounter problems, with some users losing everything last year when another exchange lost access to private keys.

This came when Quadriga, Canada’s biggest exchange was unable to gain access to over 145 million USD of Bitcoin and other digital assets. Following the death of CEO Gerald Cotten.

This time, Einstein Exchange has been forced to close after multiple customer complaints detailing access problems to assets as worrying normality.

The British Columbia Securities Commission (BCSC) has been the body that decided the closure was necessary. Customer worries over asset management and potential money laundering within the company led to this decision.

It was reported that an employee of Einstein came forward with claims of concern that the exchange had been involved with illegal activities and that they should be stopped.

The BCSC went on to say that all Canadians should be cautious when buying or selling crypto assets. Not one exchange has been authorized in the province and customers must be aware of the risks involved.

Following Einstein, a second exchange ezBtc is under pressure, with it also receiving complaints and customer dissatisfaction surrounding asset management and access.

The BCSC again gave advice, claiming users should hire lawyers to ensure they can retrieve their digital assets.

With regular claims about asset access, Canada’s crypto exchanges continue to face huge problems.

Image via Shutterstock

US Customs Agency Seeks to Adopt Blockchain Technology to Track Oil Imports from Canada

With the advancement of technology, the importance of oil and gas resources in promoting global social and economic progress is rising.

As oil and gas resources play an imperative role in the energy sector, the technologies of the industry have also developed quickly in recent years. It can be seen that the oil and gas industry is gradually developing towards the direction of automation, digitalization, and intellectualization.

But the management model of this industry is relatively old. The industry is characterized by multi-party cooperation and investment, and high risk of inefficiency, error, and fraud in transactions. Also, the slow exchange of critical data, inefficient trade negotiation process, and high third-party management costs are seen in the oil and gas trade.

However, the management model of the oil and gas industry is changing to address these problems. Key players within the industry have recognized blockchain technology as having the potential for use in the field.

The latest developing news indicates that US Customs and Border Protection has announced its intention to adopt and integrate blockchain to track natural gas and oil imports from Canada. It is a federal agency of the Department of Homeland Security (DHS).

Now let’s understand the details of the U.S customs agency’s blockchain project.

Blockchain funding

The department’s research and development unit – the science and technology directorate – has awarded $182,700 to Mavennet Systems Inc., – a Canadian blockchain firm – for the initiative.

Mavennet will develop a blockchain platform that will enable the U.S customs agency to track and audit oil and natural gas trading markets in Canada in real-time.

Canada is the fourth-largest producer of oil in the world. The country exports about 3.5 million barrels of crude oil each day to the U.S., majorly via pipeline.

Mavennet blockchain platform

Mavennet systems have developed a blockchain platform for commercial oil markets in Canada. The platform allows real-time audits of natural gas and oil trading there.

The Mavennet systems will be integrated into the Customs agency. In this way, Mavennet will build a generic end-to-end platform, which the agency can adapt to track various imported commodities. The platform includes API integration and automation and the capacity to adapt to legacy systems.

The department’s technical director – Anil John – mentioned that the system will not only offer digital auditability , but also support emerging worldwide commercial oil consortium standards for verifiable credentials and decentralized identifiers for blockchain use.

He said that accurate tracking of oil imports with the right composition and nation of origin and oil flow through refinement and pipelines between Canada and the U.S are of huge interest to the U.S customs agency.

The contracting process

This initial development award is the Phase 1 contract, which is a three-to-six-month long proof-of-concept. The contract looks for promising distributed ledger technologies and blockchain which could fill common needs across the Department of Homeland Security’s wide agency missions.

If the platform operates successfully in Phase 1, it would progress through four development phases that could eventually lead to its operational testing in various environments at DHS, after pilots and demonstrations.

The agreement continues the customs agency’s efforts to exploit emerging technology. During the past spring, the agency took public input on its 21st Century Customs Framework to process imported cargo. Shippers and lawmakers urged it to apply artificial intelligence and blockchain technology in that effort.

Takeaway

Blockchain technology continues to make its inroads within the oil and gas industry. U.S customs agency has finally joined the list of several energy giants, which are investing in the development of this technology.

Image via Shutterstock

Two Canadian Nationals Face Two Years in US Prison for Alleged Bitcoin Fraud

The US Department of Justice has sentenced two Canadian nationals to two years in the US federal prison for using a fake Twitter account to steal Bitcoins from an innocent US victim

According to the statement shared by the US Department of Justice, on March 17, 24-year-old Jagroop Singh Khatkar and 23-year-old Karanjit Singh Khatkar were sentenced to two years in federal prison and three years of supervised release after conspiring to commit fraud in a scheme to steal 23.2 Bitcoins from an Oregon resident.

Fraudsters impersonate HitBTC customer service representatives on Twitter

The two perpetrators are residents of Surrey, British Columbia, Canada, and they operated the illegal scheme designed to steal money from October 2017 until August 2018. Since then, there have been new regulation changes in Canada.

The British Columbia residents created a twitter account acting under the handle “@HitBTCAssist,” to pose as HitBTC staff. They, therefore, tricked potential victims into thinking that they were communicating with a customer service representative from the popular Hong Kong-based crypto exchange HitBTC.

Eventually, an Oregon resident sent an inquiry to the fake twitter account inquiring how she can go ahead and withdraw Bitcoins from her HitBTC account. The Khatkars convinced her to forward sensitive information associated with her email and HitBTC account. The two then managed to transfer 23.2 Bitcoins (valued $119,000 today) from the victim’s HitBTC account to Karanjit Khatkar’s wallet on the Kraken exchange.

The scammers, after committing the theft, divided the stolen Bitcoins equally and proceeded to spend the funds on a lavish lifestyle involving luxury vehicles and high-end casinos. Karanjit bought a Mercedes-Benz for almost $40,000. He also spent tens of thousands of dollars doing gambling in luxurious casinos in Las Vegas.

In July 2019, Karanjit was, however, arrested at the McCarran International Airport in Las Vegas. Jagroop later on voluntarily appeared for his arraignment. In December 2019, they both pleaded guilty to conspiring to commit money laundering and wire fraud. They were ordered to pay the victim a total of $184,511 restitution.

Crypto theft alarming rate

According to CipherTrace, a blockchain forensic firm, the crypto sector lost over $4.4 billion in thefts and scams in 2019, up by more than 150% from $1.7 billion in 2018. Crypto theft has increased because malpractices have been happening through cryptocurrency exchanges. However, regulatory authorities have increased their oversight of digital assets across the world as market participants are seeking to penetrate the crypto space. For example, know your customer regulation is helping to trace, capture, and persecute crypto scammers.

Image via Shutterstock

COVID-19 Hits Canadian Crypto Mining Firm Bitfarms, Forced to Lay Off Staff to Maintain Cost Efficiency

Publicly-traded cryptocurrency mining company Bitfarms has reduced the number of its staff members because of the ongoing social and economic crisis caused by the Coronavirus pandemic. The crypto mining company is listed on Canada’s TSX Venture Exchange. The mining firm is based in Toronto, Canada and is one of the biggest crypto mining operations in North America.

Bitfarms’ Response to Coronavirus Effect

According to the announcement, Bitfarms is laying off some of its employees on a temporary basis in line with government guidance to assist in combating the spread of coronavirus. However, the cryptocurrency mining company is also implementing permanent cost-saving measures to minimize overhead costs so that to maintain long-term viability.

John Rim, the Chief Financial Officer (CFO) of Bitfarms, stated that such cost-saving measures would help to reduce monthly general and administrative expenses. He said: “Once fully implemented over the next several weeks, we expect the cost-saving measures to reduce our monthly general and administrative expenses by approximately 20 to 25%.”

John Rim further mentioned that the cost-cutting measures would help the company to withstand volatility in business risks associated with crypto mining and to help the firm to remain profitable through the long-term, including potential challenges associated with the forthcoming halving. The much-anticipated Bitcoin halving event is expected to happen next month. During this significant event, Bitcoin will see its mining reward reduce from 12.5 BTCs to 6.25 BTCs.

It remained unclear how many employees have been let go and what is the present headcount of the crypto mining company. As per the report, the mining company currently operates five blockchain computing centers in Quebec, Canada, powered by competitively priced and clean hydroelectricity.

Maintaining the Hash Rate

Bitfarms stated that despite the havoc caused by COVID-19 crisis and the significant decline of Bitcoin prices from March 12th to March 19th, it has managed to maintain an average daily hash rate of 630 petahash per second (PH). During those dates, Bitcoin prices dropped by 50% to below $4,000 at particular days and were slowly recovering. After March 20th, Bitcoin price stood mostly above $6,000 and the crypto mining firm maintained an average daily hash rate of about 750 PH.

Emiliano Grodzki, Bitfarm’s interim CEO and Chief Strategy Officer, commented on the network difficulty. He stated that their quality and scale of operations has enabled them to continue generating positive cash flow in these difficult times.

Ripple Effects of Coronavirus on Bitcoin Miners

Where the COVID-19 crisis is affecting several other businesses, economies, and other financial markets, the field of crypto is not an exception. Several other businesses have closed their work due to this pandemic, and many others have taken safety measures to fight against the epidemic. Crypto mining operations is one area where the effect of the COVID-19 has proved to be dangerous. The virus outbreak has adversely hit the mining operations. Over 40 established crypto mining operations have been forced to close down their businesses because of the price decline of Bitcoin and unprofitable mining equipment business. Bitfarms joins the list of crypto mining companies that have recently laid off their employees. However, it remains to see how crypto mining firms will cope with the current situations.

Image via Shutterstock

Canadian Dollar Payments on Blockstream’s Liquid Network Boosting Bitcoin Adoption Powered by Bull Bitcoin

Montreal-based Bitcoin exchange Bull Bitcoin, released Liquid Canadian dollars (L-CAD) using Blockstream’s Liquid Network, taking the Bitcoin standard to Canada. Blockchain’s Liquid sidechain is used for settling Bitcoin transactions. Blockstream’s Liquid is an example of a sidechain—a separate blockchain that is attached to its parent blockchain or main chain. One of Liquid’s promoted features is enhanced privacy and its support for confidential transactions.

The new peer-to-peer voucher can be redeemed only for Bitcoin and is denominated in Canadian dollars. Merchants must buy Bitcoin to receive its underlying value if the voucher is used accounting for payments. The Liquid Network also enables confidential and irreversible transactions on Liquid Network and does not require any intermediaries or custody fees for the exchange.

By launching L-CAD, Francis Pouliot, CEO of Bull Bitcoin explains that the “purpose of Liquid CAD is to facilitate the transfer fiat in the context of the purchase and sale of Bitcoin and providing innovative new services that help Bitcoin users hedge the value of Canadian dollars against Bitcoin in the context of their commercial transactions.”

Bitcoin adoption and regulation

In a post on Medium, Pouliot emphasized that this product is meant to accelerate the adoption of Bitcoin by Canadians. L-CAD is regulated by the province of Quebec and acts as a prepaid card under the Consumer Protection Act and the regulation under the application of the Consumer Protection Act.

Users can also trade the vouchers on secondary markets and could be traded for other assets. Unlike other stablecoin companies, Bull Bitcoin only aims to profit through driving more Bitcoin sales to their exchange, as the underlying backing can only be purchased from Bull Bitcoin and its partners.

Accelerating fiat bleed

Pouliot is a “Toxic Bitcoin Maximalist,” mentioned that the idea behind the logo for L-CAD due to Bull Bitcoin’s aim to “accelerate fiat bleed,” an idea put forward by Pierre Rochard. The “fiat bleed” phenomenon as described by Pierre Rochard of how Bitcoin will eventually drive out the weaker currencies while forcing hyper-Bitcoinization.

Image via Shutterstock