Canadian regulator: "LAToken exchange trades derivatives, not cryptocurrencies"

The Office alleges that users of the platform "did not actually buy or sell assets." Instead, they exchanged contractual rights for assets, which allowed them to request future withdrawals. The BCSC concluded that the rights were derivative and the value was determined by the underlying crypto assets.

"In addition to failing to register under the Securities Act, Liquitrade facilitated the creation of a derivatives trading market and its promotion on the LAToken exchange. We found that Liquitrade was operating as an exchange, but the company was not authorized by the BCSC to do so," the Canadian regulator said.

In November 2022, the British Columbia Securities Commission (BCSC) warned that the Cayman Islands-registered parent company of LAToke had not received authorization to operate. The BCSC advised representatives of Liquitrade to visit its offices on January 10, 2023, before a hearing on the company's operations.
Liquitrade did not participate in the investigation, although the BCSC sent notices to the company. The agency now intends to consider penalty options for the exchange, which could include monetary penalties or a ban on market-making activities.

Last year, the BCSC accused Vancouver-based ezBtc, a non-functioning cryptocurrency platform, of a $13 million fraud. In 2020, the Canadian Securities Administrators (CSA) introduced guidance that would bring the country's cryptocurrency exchanges under the purview of securities laws