The **British Columbia Securities Commission (BCSC)** has revealed the outcome of its inquiry into the cryptocurrency trading platform Liquitrade, indicating that the firm was running an unauthorized exchange. The investigation also uncovered that, contrary to the company’s assertions, users were exchanging contractual rights rather than actual crypto assets.
**Liquitrade’s Platform Trades in Derivatives, Not Cryptocurrencies**
On the 3rd of July, the BCSC made public that Liquitrade Ltd. had been operating its Latoken platform without the necessary registrations, constituting an illicit exchange within the region. The BCSC’s investigative panel discovered that participants on the crypto asset trading platform were not engaging in the purchase and sale of the assets themselves.
Rather, what was being traded were contractual rights associated with the assets, granting users the ability to make withdrawal requests in the future. These rights were identified by the panel as derivatives, with their value tied to the underlying crypto assets. The BCSC elaborated in a **statement**:
“Liquitrade, while unregistered under the Securities Act, nonetheless facilitated trades through various means. This included establishing a market for trading derivatives and promoting derivatives traded on LATOKEN. It was also found that LiquiTrade functioned as an exchange, which it was not sanctioned to do by the BCSC, as mandated by the Act.”
**Potential Sanctions Looming for Liquitrade**
Prior to releasing its recent statement regarding Liquitrade’s Latoken platform, the BCSC had issued a **warning** in November 2022. It stated that Latoken’s parent company, based in the Cayman Islands, lacked recognition from the Commission. Subsequently, the BCSC had summoned representatives from Liquitrade to its offices on January 10, 2023, in anticipation of a hearing concerning its operations.
Nonetheless, as reported by CNBC, Liquitrade did not partake in the investigation as had been requested, despite the BCSC keeping them informed during the process. The BCSC’s panel is now contemplating disciplinary actions, which could entail financial fines or prohibitions on market activities, as per the Commission’s statements.
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