The Ontario Securities Commission (OSC) published its reasons for accepting a settlement with online crypto asset trading platform, Aux Cayes Fintech Co. Ltd., wherein the firm admitted to engaging in the business of trading securities without the necessary registration, without an applicable exemption and without being exempt from prospectus requirements. In the agreement the firm agreed to pay more than $1.1-million.

Broken down, the sanctions include a $600,000 administrative penalty, disgorgement of the US$514,950 in revenue it earned from Ontario investors and $25,000 for the costs of the OSC’s investigation. The OSC says Aux Cayes has paid the amounts to the commission prior to its settlement hearing. The funds were held in escrow pending the approval of the settlement.

The agreement states that from the time Aux Cayes launched its platform in October 2017 until June 2022, the platform – the OKX Platform – opened more than 21,000 accounts for Ontario investors. Investors made use of just 1,534 of those accounts, from which Aux Cayes obtained the revenues it disgorged under the agreement.

In May 2021 the OSC informed the firm that it was conducting registrable activity in Ontario. Although the firm responded to the commission saying it would identify and close the Ontario accounts, the firm made incorrect representations in the meantime about what information was available regarding its Ontario accounts, first saying information was not available before later providing the information requested by the commission.

Currently they say Aux Cayes is taking steps to explore the registration and compliance process. It also provided an undertaking in which it states that it will restrict its business while it pursues registration, and that it will leave Ontario in an orderly fashion if those discussions terminate.

More, until it becomes registered or ceases operations, the firm will donate ongoing revenues from Ontario accounts to Prosper Canada Centre for Financial Literacy.

“Foreign companies in the business of online trading of securities or derivatives for Ontario residents are subject to Ontario securities law,” the settlement agreement states.