<\/p>\n
A Canadian Court of Appeal ruled in favor of Binance in a case involving the OSC\u2019s document production request which the court deems \u2018unconstitutional.\u2019<\/p>\n
<\/p>\n
According to official court documents, the Court of Appeal of Ontario declared that the Ontario Securities Commission overstepped authority when it ordered Binance to hand over large amounts of internal communication documents as part of an investigation.<\/p>\n
The court deemed the commission\u2019s summons was too broad and \u201cunconstitutional\u201d as it violated protections under Canada\u2019s Charter of Rights and Freedoms. As a result, the OSC has been ordered to return the seized documents to Binance (BNB) and pay $15,000 to the exchange as part of the cost of the appeal.<\/p>\n
Back in 2024, regulators were probing Binance operations to check whether or not the crypto exchange had broken securities laws by offering crypto trading services to Ontarians. As part of the investigation, the Commission asked the exchange to present documents that involved \u201call communications regarding Ontario or Canada\u201d dating back to January 2021.<\/p>\n
The request to produce a multi-year record of all communications as part of the probe was challenged by Binance. The crypto company argued that the order was \u201cso overbroad as to be unconstitutional.\u201d Binance lawyers said that the request would involve producing years worth of emails and internal discussions that went far beyond what was necessary for the inquiry.<\/p>\n
<\/p>\n
In the end, the Court of Appeal ruled in favor of Binance. The panel said that the OSC\u2019s request violates the Charter when it comes to regulatory investigations, as Binance still has a right to maintain its some semblance of privacy.<\/p>\n
Moreover, the judges agreed that the Commission\u2019s request was \u201coverbroad\u201d and said that it was similar to a fishing expedition that tried to find faults in the crypto exchange\u2019s operations rather than a focused investigation.<\/p>\n
By demanding all communications from Binance over a multi-year span, the regulator had failed to narrow down its request to just materials that were reasonably relevant to its case. As a result, the court ruled the summons was unconstitutional and ordered the OSC to return any documents it had obtained through it.<\/p>\n
Though, the ruling does not mean that OSC cannot continue its investigation on Binance. The agency can continue its probe if it can issue a more reasonable and targeted summons that meets constitutional standards.<\/p>\n
The Ontario Securities Commission has been known to enforce legal actions against non-compliant crypto firms operating both within and outside its borders. In 2022, the OSC took action against crypto exchange Bybit for conducting business in Ontario without a license, which violated securities laws.<\/p>\n
The case resulted in a settlement in which Bybit paid CAD 2.5 million in penalties and departed the Canadian market. Bybit\u2019s exit was later followed by KuCoin, which was also fined for operating in the region without proper registration.<\/p>\n
Due to the country\u2019s strict regulatory hold over crypto, several other major exchanges chose to leave the market including Gemini, Binance, OKX, dYdX and Bybit. Many of these exchanges attributed their exit to the complexity and cost of complying with Canadian regulations that made it difficult to stay.<\/p>\n
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