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Canada's OSC Flags Tweets From Coinbase, Kraken CEOs

The Ontario Securities Commission has reported anti-Emergencies Act tweets to police.

Canada's OSC Flags Tweets From Coinbase, Kraken CEOs
Shutterstock photo by claudenakagawa

Key Takeaways

  • The Ontario Securities Commission has apparently reported tweets from two crypto exchange CEOs to law enforcement.
  • Those tweets are from the CEOs of Coinbase and Kraken, who criticized Canada's Emergencies Act after it was invoked last week.
  • The Emergencies Act allows Canada to blacklist crypto addresses with ties to the Freedom Convoy protests.

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The Ontario Securities Commission has flagged tweets from two cryptocurrency exchange leaders, according to The Logic.

CEOs Criticize Crypto Restrictions

On Feb. 14, Canada invoked its Emergencies Act in an attempt to control the Freedom Convoy, a group protesting COVID-19 restrictions by occupying Ottawa’s downtown core.

Those restrictions allowed the government to immediately freeze several bank accounts and prevent exchanges from working with certain cryptocurrency addressess. Over 34 cryptocurrency addresses were initially blacklisted last week.

Soon after the Emergencies Act was put into effect, two cryptocurrency exchange leaders criticized the policy.

Brian Armstrong, CEO and co-founder of Coinbase, said that it is “concerning to see stuff like this happening in any country, especially such an economically free place like Canada.”

Meanwhile, Kraken CEO Jesse Powell tweeted: “Do you see where this is going?…I’m sure freeze orders are coming” and said elsewhere that his exchange “will [100%] be forced to comply” with police orders. Powell previously donated 1 BTC to the Freedom Convoy movement, an amount worth $37,400 at current market prices.

Both CEOs urged investors not to hold their cryptocurrency in custodial exchange wallets. Rather, they advised users to hold funds in and send funds from a non-custodial off-exchange wallet.

While regulators can create a blacklist that prevents non-custodial wallets from moving funds through exchanges, regulators cannot prevent those wallets from moving cryptocurrency on-chain.

OSC Reports Tweets to Police

Now, Ontario’s securities regulator, the Ontario Securities Commission, has apparently reported the above tweets to law enforcement, namely the Royal Canadian Mounted Police.

“We are aware of this information and have shared it with the RCMP and relevant federal authorities,” OSC manager of public affairs Kristen Rose told The Logic on Feb. 21.

Experts suggested that Powell and Armstrong’s tweets are unlikely to be considered illegal or cause either individual to become a designated person under the Emergencies Act.

Nevertheless, the tweets clearly advise investors on how to evade regulations. One expert suggested that those tweets are poor optics and that the messages within could cause Canadian regulators to “closely monitor these exchanges” and attract “undue attention.”

Both Kraken and Coinbase offer services in Canada and are registered with FINTRAC, Canada’s financial intelligence agency. Though cryptocurrency exchanges were required to report to FINTRAC before the Emergencies Act took effect, the invocation of the act means that crowdfunding platforms (and payment services used by crowdfunding platforms) must now report to FINTRAC as well.

Despite those expanded compliance efforts, it is still unclear to what extent Kraken, Coinbase, and other crypto exchanges are working with Canadian authorities on enforcement.

Disclaimer: At the time of writing this author held less than $100 of Bitcoin, Ethereum, and altcoins.

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