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The Ontario Court of Appeal has ruled that the OSC probe request targeting Binance violated constitutional rights by demanding excessively broad internal records.
The decision, issued this week, found that the Ontario Securities Commission (OSC) overstepped its legal authority when it ordered Binance to submit years of internal communications as part of a securities investigation.
According to official court filings, the court declared that the regulator’s summons infringed on privacy protections guaranteed under Canada’s Charter of Rights and Freedoms. The judges ordered the OSC to return all seized documents and compensate Binance with $15,000 in legal costs.
The OSC’s probe began in 2024, when it sought to determine whether Binance had violated Ontario securities laws by offering crypto trading services to local investors without proper registration. As part of that inquiry, the Commission issued a sweeping demand for “all communications regarding Ontario or Canada” dating back to January 2021.
Binance challenged the OSC probe request, arguing that the regulator’s order amounted to a “fishing expedition” rather than a targeted inquiry. The court ultimately agreed, describing the demand as “overbroad and unconstitutional.”
“This ruling reaffirms that regulatory oversight cannot override fundamental privacy protections,” said David Rosenfeld, partner at Rosenfeld & Co. Securities Law, in an interview. “The OSC probe request was simply too expansive to meet constitutional standards.”
The three-judge panel concluded that the OSC probe request was unconstitutional because it lacked reasonable limitations. By demanding several years’ worth of internal Binance communications, including emails and internal discussions unrelated to the alleged infractions, the Commission had effectively gone beyond its legal mandate.
“The summons issued in this case was not proportionate to the stated purpose of the investigation,” wrote the court in its decision. “Regulators must exercise their powers within the boundaries of necessity and reasonableness.”
Legal experts note that the decision marks a rare judicial rebuke of Canada’s financial watchdog, underscoring the importance of due process even in complex crypto enforcement cases.
“This judgment sends a clear message that even regulators must act within the rule of law,” said Dr. Melissa Kent, professor of financial regulation at York University. “The OSC probe request failed the constitutional test of relevance and scope.”
While the court’s decision forces the OSC to return the seized materials, it does not prevent the agency from continuing its investigation into Binance. However, any future OSC probe request must now be more narrowly defined and justified to meet constitutional requirements.
Binance, which has faced regulatory pressure in several jurisdictions, welcomed the decision as a “win for procedural fairness.” The company maintains that it has worked to improve compliance globally, even as it scales back operations in more restrictive markets like Canada.
“The court’s decision reinforces the principle that investigations must be fair and proportionate,” a Binance spokesperson said in a statement. “We remain committed to engaging with regulators in good faith.”
Analysts believe the ruling could influence how other Canadian agencies structure their investigative powers, particularly when dealing with digital asset firms. It also highlights the growing tension between regulatory oversight and the protection of digital-era privacy rights.
The OSC probe request case adds to a broader pattern of enforcement actions taken by the Ontario Securities Commission against crypto firms operating without local registration. The regulator previously fined Bybit CAD 2.5 million and forced KuCoin to exit the market in 2022 for similar violations.
Since then, several major exchanges including Binance, Gemini, OKX, and dYdX have withdrawn from the Canadian market, citing the high cost and complexity of compliance. The Canadian Securities Administrators (CSA) have maintained that these rules are essential for investor protection, though critics argue they stifle innovation.
“The court’s decision could prompt the OSC to rethink how it balances investor safety with constitutional rights,” said Kent of York University. “It doesn’t eliminate oversight, but it raises the standard for future OSC probe requests.”
Ultimately, the ruling underscores the ongoing evolution of crypto regulation in Canada where courts, lawmakers, and agencies are still defining how far regulatory power can go in the digital asset economy.
