The Ontario Court of Appeal in Lochan v. Binance Holdings Limited upheld the certification of a class action against Binance for allegedly selling crypto derivatives without filing a prospectus, in violation of ss. 53(1) and 71(1) of the Ontario Securities Act. The class includes Canadians who bought these products through Binance’s platform. Parallel regulatory proceedings between the OSC and Binance remain ongoing.
Background
Binance wasn’t registered with the OSC and didn’t file or deliver a prospectus. Plaintiffs seek rescission or damages for unregistered securities trading. Binance’s motion to stay the action based on its arbitration clause was rejected at both the motion and appellate levels. Justice Morgan certified the action, finding a plausible cause of action and sufficient basis for the certification criteria.
Court of Appeal Analysis
The Court focused on whether the plaintiffs had a valid cause of action under the Act:
Binance argued that s. 71(1) only applies where a prospectus was filed but not delivered, and since none was filed, the section—and any remedy under s. 133(1)—was irrelevant. Justice Monahan disagreed, holding that the claim was not certain to fail and that Binance’s reading conflicted with the Act’s purpose. Binance also claimed that the plaintiffs, by purchasing without a prospectus, were themselves illegal traders and thus barred from recovery. The Court rejected this, emphasizing that it was not plain and obvious the legislature intended to eliminate common law rights in such cases.
Key Point
While the ruling addresses certification standards, it signals judicial openness to letting securities claims involving crypto and unsettled regulatory questions proceed to trial.
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