The Ontario Securities Commission (OSC) accused the cryptocurrency exchange Poloniex of breaking its securities law through its platform. The regulator argues that crypto asset products offered by the company are “securities and derivatives,” according to a statement of allegations published by the OSC.

Poloniex, which operates under the name of Polo Digital Assets Ltd., is subject to Ontario securities law as their digital assets offerings are available to Ontario’s residents, said the regulator. Through the platform, people have been actively conducting deposit and trade operations in cryptocurrencies that fell under the securities and derivatives category granted by the OSC, the statement highlighted.

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“Poloniex has nonetheless failed to comply with the registration and prospectus requirements under Ontario securities law. Registration and disclosure are cornerstones of Ontario securities law. The registration requirement serves an important gate-keeping function by ensuring that only properly qualified and suitable persons are permitted to engage in the business of trading,” said the OSC.

Although Poloniex is subject to the law of the Republic of Seychelles, the Canadian regulator pointed out that the crypto exchange has never been registered with the OSC to offer trading services in Ontario. Furthermore, the Commission accuses the crypto firm to not specify Canada as one of its ‘Restricted Territories’.

Regulator Issues Order to Cease Operations

That said, the OSC requested that Poloniex cease its business “in any securities or derivatives.” In addition, the regulator ordered that the crypto exchange be prohibited from becoming or acting as “a registrant, as an investment fund manager or as a promoter permanently or for such period as is specified by the Commission.”

Furthermore, the company is subject to pay an administrative penalty of not more than 1 million CAD ($825,650) for each failure to comply with Ontario securities law, as well as paying for the costs of the OSC’s investigation and the hearing.

Finance Magnates reported early this year that the Ontario Securities Commission gave the green light to the first Bitcoin exchange-traded fund, which is the first-of-its-kind to be listed on a North American exchange.