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The British Columbia Securities Commission (BCSC) has flagged Latoken, a crypto exchange, for violating British Columbia’s (BC) laws by operating without a license. LiquiTrade Limited ran an illegal platform known as Latoken in the BC without authorization.
Also read: London pair arrested for running illegal crypto exchange
The financial securities watchdog revealed in a report published this week that LiquiTrade was never registered under the Securities Act even while it allowed users to trade some popular digital assets like Bitcoin and Ethereum.
Latoken traded “a representation” of Bitcoin
The crypto exchange operator was incorporated in the Cayman Islands in 2020 and started operating the illegal Latoken platform. Concerns mainly revolved around whether the platform was “actually trading crypto.” According to CBC News, the BCSC found out that users were not trading crypto assets on Latoken but buying rights to the crypto.
A Simon University professor who extensively studies and researches blockchain, Peter Chow-White explained that: “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.”
Also read: Coinbase and Brian Armstrong hit with new lawsuit over illegal securities
According to the BCSC, its investigator opened a Latoken account and traded on the platform. However, he discovered he had no control over his crypto assets. Users make requests to the exchange to make withdrawals from the platform.
“The investigator said he could not withdraw the crypto assets from the account except through a process provided by LiquiTrade,” said BCSC in its report. The regulator further revealed that the investigator could not trade with another person except through the system provided by LiquiTrade.
LiquiTrade investigations in other regions
In 2022, a financial industry regulator in Germany, the Federal Financial Supervisory Authority (BaFin) investigated Latoken. The investigation revealed that the company operated illegal banking and financial services in the country.
In the latest case in BC, the crypto firm did not participate in the hearing, according to CBC News. However, the regulator indicated that the company was notified of the process. BCSC also said it is now deciding on LiquiTrade’s fate, which includes a fine or a total ban.
According to the BCSC investigations, LiquiTrade has marketed its Latoken platform as a “regulated exchange,” and “top-40 most trusted exchange.” A blog post in January 2022 claimed the platform had over 1.5 million users then, over a million downloads on Google Play, and recorded more than $300 million in daily turnover.
Cryptopolitan reporting by Enacy Mapakame
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