Tausi Insider

Sam Bankman-Fried chief executive of FTX, a crypto derivatives exchange that offers products unavailable to traders in the U.S., sits in the company's offices in Hong Kong, on May, 26, 2021. LAM YIK FEI/The New York Times News Service Adam Chisholm is a partner and group head of the complex disputes and regulatory regimes group at McMillan LLP and has experience in securities regulatory and administrative law. The views expressed are his own. Is bitcoin a security? A commodity? Something else? These simple questions have traditionally not had simple answers, even in places where there are modern securities laws. There is one difference between jurisdictions around the world, however. The Ontario Securities Commission (OSC) – Canada’s de facto chief regulator, given the province’s status as a financial centre – has chosen to align with the United States in taking zealous enforcement action against cryptocurrency trading platforms. The recent implosion of the US$32-billion-dollar, ...

The stunning implosion of FTX Ltd. has derailed its plans to officially launch in Canada, but it’s unclear if regulators in this country were even able to peer into the books of the cryptocurrency exchange as part of their due diligence on the company that now faces potentially criminal liability. Months before it filed for bankruptcy amid a scandal that continues to reverberate across the global crypto industry, FTX was on course in June to acquire Bitvo Inc., a Calgary-based crypto exchange regulated by all 13 provincial and territorial securities commissions in Canada. It was one of several opportunities Canadian regulators were ostensibly provided to look closely at FTX’s finances. Bahamas-based FTX had already been operating in Canada, despite not having regulatory approval. Retail investors were able to hold digital wallets on FTX’s platform to store their crypto, with many using VPN technology, which anonymized their Canadian location and created a private network from a publ...

Trading platforms that reward do-it-yourself investors through “gamification” strategies are increasing the risk of losses in online portfolios, a new study says. In a research report scheduled to be released on Thursday, the Ontario Securities Commission in collaboration with British-based Behavioural Insights Team found that investors who received rewards from trading platforms – such as digital points or online badges for buying or selling stocks – made almost 40 per cent more trades than those who were not exposed to the same gamification rewards. Gamification is the practice of incentivizing users to trade more frequently or in larger amounts by adding game-like features to trading platforms. Competitive features such as leaderboards, which display the names of users who do the most trades per day, or images of badges or bursts of confetti that reward a first trade in a margin account or a family referral, are encouraging investors to trade more often. Investing apps 101: What a...

Samuel Bankman-Fried, founder and CEO of FTX, testifies during a Senate Committee on Feb. 9. SAUL LOEB/AFP/Getty Images Blair Wiley is chief legal officer of Wealthsimple, which offers cryptocurrency trading. Critics are quick to suggest that events like the recent collapse of FTX Ltd. make crypto a Wild West, without the regulatory oversight we take for granted in other industries. But in fact, in Canada, we do have a regulatory framework for crypto and it’s been working, and working well. Canadians are affected by the insolvencies of the Bahamas-based FTX, and New Jersey’s Celsius before it, largely because those companies have been operating in the country without conforming to its regulatory framework. It’s estimated that total losses from FTX could exceed US$10-billion, spread across a million creditors, including in Canada. More needs to be done to bring these foreign platforms under our regulatory framework and fast, otherwise Canadians will continue being victim to poor actor...

The Ontario government is down to a short list of candidates to chair the provincial securities regulator, with two veteran financial executives among those in the running to lead the recently restructured agency. Two current Ontario Securities Commission directors, Cindy Tripp and Kevan Cowan, are the front-runners to become the next chair of Canada’s largest market regulator, according to six Bay Street sources close to the agency. Tausi Insider is not naming these sources because they were not authorized to speak publicly about the appointment process. Ontario Finance Minister Peter Bethlenfalvy is expected to announce the new OSC chair in the next week or two, according to a government spokesperson. Heather Zordel resigned as chair in late October after seven months in the role. Her brief tenure created a stir within the regulator, with two part-time commissioners resigning in protest over her appointment. The two leading candidates to head the OSC’s board both have experience in...

A lawyer representing Ontario’s securities regulator says three former executives whose cannabis company was caught growing pot in unlicensed rooms were in positions to disclose the improper growing but didn’t. Dihim Emami, a lawyer for the Ontario Securities Commission, said in a Toronto court today that by not disclosing the unlicensed growing at CannTrust Holdings Inc., Peter Aceto, Eric Paul and Mark Litwin caused “incredible” damage to investors. The three men have pleaded not guilty to a series of securities offences linked to the unlicensed growing at a Niagara, Ont. region facility, including fraud and authorizing, permitting or acquiescing in the commission of an offence. Litwin and Paul are also facing insider trading charges, and Litwin and Aceto are charged with making a false prospectus and false preliminary prospectus. The charges were first laid by the OSC in June 2021, around the same time executives told shareholders the Vaughan, Ont. company was compliant with regul...

The Ontario government has tapped Kevan Cowan to serve as chair of the province’s securities regulator after the unexpected departure of its last chair, Heather Zordel. Mr. Cowan most recently served as the chief executive officer of the Capital Markets Authority Implementation Organization, the latest attempt by a collection of provinces at establishing a pan-Canadian securities regulator. A lawyer, Mr. Cowan also served on an advisory panel to Ontario’s Capital Markets Modernization Task Force, which proposed a series of recommendations in 2021 that brought about sweeping structural changes to the Ontario Securities Commission. The Globe reported last week that Mr. Cowan and Cindy Tripp, who co-founded investment bank GMP Securities LP in 1995 and served on the modernization task force, were the front-runners for the position. Both are currently directors at the OSC. The chair position was left vacant because of the unexpected resignation of Ms. Zordel, the government’s last pick f...

Sam Bankman-Fried, founder of FTX, speaks via a video feed from the Bahamas to The New York Times DealBook conference in New York on Nov. 30. HIROKO MASUIKE /The New York Times News Service Canadian watchdogs responsible for investor protection are banding together to enhance their regulation of the crypto sector, using unusually sharp language to threaten legal action against companies that remain resistant to outside oversight and warning trading platforms to stay away from one of the sector’s most nebulous assets. Canadian Securities Administrators (CSA), a collection of provincial and territorial securities regulators, has pursued oversight of the crypto sector for close to two years, but the process of registering crypto trading companies is a complex task. It is also time consuming, considering that hundreds of trading platforms were already up and running by the time the watchdogs released formal regulations in March, 2021. Since the rules came out, many crypt...

Former CannTrust CEO Peter Aceto, centre, leaves Old City Hall with his lawyer, Frank Addario, left, in Toronto, on Dec. 14, 2022. Eduardo Lima/Tausi Insider The prosecution of three former high-ranking officials of CannTrust Holdings Inc. has collapsed after a key government witness conceded that the fundamental allegation against the trio – that they permitted unlicensed growing at their company’s cannabis facility – is incorrect. In court on Wednesday, a lawyer for the Ontario Securities Commission announced that the regulator was withdrawing its case against former CannTrust chief executive officer Peter Aceto, former chairman Eric Paul and Mark Litwin, a former director. The lawyer, Dihim Emami, said the OSC had reassessed the case and was now “of the view there’s no reasonable prospect of conviction.” Lawyers for the three men opposed the commission’s move, asking Justice Victor Giourgas, instead, for a verdict and a complete acquittal. But Mr. Emami asked the court for a one-d...

Former CannTrust CEO Peter Aceto, centre, leaves Old City Hall, in Toronto, on Dec. 14. Eduardo Lima/Tausi Insider An Ontario court has acquitted three former cannabis leaders charged with offences linked to unlicensed growing at a Niagara-area greenhouse. The ex-CannTrust Holdings Inc. executives Peter Aceto, Eric Paul and Mark Litwin were freed of their charges a day after the Ontario Securities Commission (OSC) revealed it no longer had a reasonable prospect of convicting the men. The OSC asked the Old City Hall court in Toronto on Wednesday to adjourn the matter until Thursday, so it could review case law Litwin’s lawyer said would support the case being wound up. His client, along with Aceto and Paul, were each charged with fraud and authorizing, permitting or acquiescing in the commission of an offence. Litwin and Paul were also facing insider trading charges, and Litwin and Aceto were charged with making a false prospectus and false preliminary prospectus. The men pleaded not ...

Former CannTrust CEO Peter Aceto, center, leaves Old City Hall with his lawyer, Frank Addario, left, Toronto, on Dec. 14. Eduardo Lima/Tausi Insider An Ontario judge ruled Thursday that three former high-ranking officials from CannTrust Holdings Inc. CNTTQ were not guilty of any charges brought against them by Ontario’s securities regulator, bringing an abrupt and final close to a trial that ended almost as soon as it began. The quasi-criminal trial of former CannTrust chief executive officer Peter Aceto, former chairman Eric Paul and former director Mark Litwin was scheduled to take place over 50 days, but instead only required eight days of evidence before lawyers for the three men asked Justice Victor Giourgas to issue a verdict. “Acquittals shall be entered for all of the defendants,” Justice Giourgas said Wednesday, officially ending the failed enforcement case brought by the Ontario Securities Commission. When the trial ended shortly before noon, family members and supporters o...

Former CannTrust CEO Peter Aceto, left, leaves the Old City Hall courthouse after being acquitted on all charges in Toronto on Dec. 15. Nathan Denette/The Canadian Press Legal experts say the acquittal of three former cannabis executives should prompt the Ontario Securities Commission to do some “deep soul searching.” The Thursday acquittal of ex-CannTrust Holdings Inc. CNTTQ chief executive Peter Aceto, chairman Eric Paul and vice-chair Mark Litwin came a day after the regulator revealed it no longer had a reasonable prospect of convicting the men on charges linked to alleged unlicensed cannabis growing at a Niagara area facility. The trio, who pleaded not guilty in October, were each charged with fraud and authorizing, permitting or acquiescing in the commission of an offence. Litwin and Paul were also facing insider trading charges, and Litwin and Aceto were charged with making a false prospectus and false preliminary prospectus. Industry observers were eagerly anticipating the ou...

Former CannTrust CEO Peter Aceto, center, leaves Old City Hall with his lawyer, Frank Addario, left, Toronto, on Dec. 14. Eduardo Lima/Tausi Insider An Ontario judge ruled Thursday that three former high-ranking officials from CannTrust Holdings Inc. CNTTQ were not guilty of any charges brought against them by Ontario’s securities regulator, bringing an abrupt and final close to a trial that ended almost as soon as it began. The quasi-criminal trial of former CannTrust chief executive officer Peter Aceto, former chairman Eric Paul and former director Mark Litwin was scheduled to take place over 50 days, but instead only required eight days of evidence before lawyers for the three men asked Justice Victor Giourgas to issue a verdict. “Acquittals shall be entered for all of the defendants,” Justice Giourgas said Wednesday, officially ending the failed enforcement case brought by the Ontario Securities Commission. When the trial ended shortly before noon, family members and supporters o...