Canada Firms Filed Lawsuit Unsuccessfully Reveals Crypto Trading Fees
Two trading firms in Canada are facing a class-action lawsuit after it was alleged their platforms charged millions of dollars in fees despite claiming they were commission-free.
ONE Globe and Mail the report cites the lawsuit alleging that Wealthsimple Technologies and Shakepay Inc. generated millions of dollars in profits while deceiving customers about the actual costs of using their respective platforms.
Law firm LPC Avocat is seeking CA$10 million in damages from each organization.
Calls for a national class action lawsuit
Joey Zukran, an attorney at LPC Avocat, said Globe and Mail: “I think these companies took advantage of what many have called a crypto gold rush during the pandemic.”
Throughout 2020 and 2021, analytics platforms recorded an increased number of trades despite greater uncertainty due to COVID-19.
However, Wealthsimple spokesperson Rachael Factor has denied the allegations, telling the media: “We’ve always been transparent about what we charge for our services – that’s our commitment to our clients.”
However, victims have come forward and said that the companies’ bids/asks are kept “deliberately large.” Highly liquid cryptos, such as Bitcoin, are expected to have lower bid-ask spreads due to their large trading volume.
“If Wealthsimple inflates the offer price by 2% or more in some cases, it simply bakes the commission fee into the spread,” Zukran argued.
Canada’s Conservatives Elect Pro-Crypto Leader
Under new temporary rules issued by Canada’s financial regulator OSFI, banks and insurance companies must limit their crypto exposure.
And all registered organizations must follow advertising and other guidelines set by the Canadian regulators.
For investors, the Canada Revenue Agency (CRA) treats digital assets as commodities under the Income Tax Act, the website says. But “purchasing a cryptocurrency with the intention of selling it for a profit may be treated as business income, even if it is an isolated event,” the CRA says.
Despite upcoming regulations, Canadian watchdogs have consistently raised risk warnings related to the asset class. Some time ago, another consumer alert from the Ontario Securities Commission (OSC) warned citizens about unregistered cryptocurrency platforms.
Canada’s opposition plays a crucial role in determining the fate of regulations.
Pierre Poilievre, a pro-crypto politician, has been elected to lead Canada’s Conservative Party. As part of his future election plan, Poilievre promised to put the people of Canada back in making economic decisions and blamed the Liberal government’s policies for the high rate of inflation.
In response, Prime Minister Justin Trudeau called it irresponsible to advise people to avoid inflation by investing in crypto.
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