A Canadian securities regulator has barred the country’s first two registered digital currency exchanges from trading Tether (USDT). The stablecoin, which is seemingly printed at will and has been deeply linked to alleged market manipulation, is the only prohibited digital asset in the country to date.
The Ontario Securities Commission has a history of being tough against digital currency operators. After giving exchanges an April deadline to license their operations, it has been cracking the whip on those that didn’t, from Poloniex to KuCoin, OKEx, and Bybit.
Now, it has set its sights on the world’s biggest stablecoin, USDT.
The commission has barred Coinberry and Wealthsimple exchanges from offering Tether trading services. The two are the first exchanges in Canada to receive an operating license allowing them to offer digital currency trading services across all the provinces in Canada.
Coinberry received its approval from the Canadian Securities Administrators (CSA) a week ago, allowing it “to offer Canadians crypto-based products and services on a regulated platform.” It boasts of being the first pure-play exchange to receive the license in Canada. Wealthsimple received the approval first, but unlike its peer, it doesn’t allow its users to withdraw their digital assets, much like Robinhood Crypto.
Despite receiving the regulatory approvals to serve Canadians, the two exchanges will not be able to offer USDT. The stablecoin was the only one listed under “Prohibited Crypto Assets,” with the regulator offering no reasoning for its decision.
Banning Tether was justified, and here’s why
The ban on trading of USDT has been a long time coming, and the Ontario regulator has taken a step that many other bigger watchdogs should have years ago.
Tether’s controversies and issues are unending. From market manipulation to shady and unchecked printing of tokens to links with illegal outfits, the stablecoin has it all, and then some.
While it could have listed any of these reasons, the Ontario watchdog chose to shy away, with a representative telling one news outlet, “We do not currently plan to introduce new rules specifically applicable to platforms, as platforms are already subject to existing requirements under securities legislation in Canada.”
One Canadian lawyer was much blunter, however, citing the endless legal battles by Tether and its sister company Bitfinex as a key factor for the ban in Ontario.
Christine Duhaime stated, “With respect to Tether and Bitfinex, the report by the New York AG likely did not provide comfort to the securities regulators and in the eyes of a government regulator, is likely going to be viewed as high-risk.”
The lawyer, who specializes in fintech, was referring to an action by Letitia James, the New York Attorney General on Tether and Bitfinex for allegedly suffering an $850 million loss and covering it up. AG James settled with the two earlier this year, requiring them to cease all activities in New York and to pay close to $20 million in fines.
Duhaime added, “Until some digital currency companies tie themselves to a jurisdiction with transparency and where digital currency holders have rights they can exercise if things go awry, I suspect that they won’t be permitted to operate in mature regulatory jurisdictions.”
At this point, it’s incomprehensible that Tether has yet to be made to account for its actions. Granted, the U.S Justice Department is reportedly investigating Tether executives for alleged bank fraud – which Tether audaciously dismissed as “repackaging stale claims as news to generate clicks.”
However, even with the ongoing investigations, Tether is still trading on every other exchange and clocks the highest trading volume, more than the four largest digital currencies combined. The company has also taken back to its unchecked minting of new USDT tokens after a brief hiatus. In August, it printed well over 4 billion USDT.
As CoinGeek reported, it’s not just the printing that’s a concern with Tether, there’s also the ‘small’ issue of where the new USDT goes. Insiders have revealed that an overwhelming majority of newly minted tokens goes to Alameda Research and Cumberland, two market making companies with questionable profiles, business partnerships and leadership.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.