The Ontario Court of Appeal has confirmed that securities regulators’ investigatory powers are not unlimited.
In Binance Holdings Limited v. Ontario Securities Commission, 2025 ONCA 751, the Court set aside an Ontario Securities Commission (OSC) document demand it described as “staggering in its breadth,” holding that it violated Section 8 of the Charter’s protection against unreasonable search and seizure.
The decision arises amid the OSC’s broader efforts to bring offshore crypto-asset trading platforms into compliance with Canadian securities law. Binance, one of the world’s largest crypto exchanges, has faced similar scrutiny from regulators globally.
In reviewing a request by the OSC, the court confirmed that while participants in the Canadian capital markets have a reduced expectation of privacy over regulated activities, it is not a non-existent expectation. This reduced expectation of privacy is still Charter–protected and will be enforced by the courts.
Section 8 of the Charter of Rights and Freedoms confirms that, “Everyone has the right to be secure against unreasonable search or seizure.” This right applies to both individuals and corporations. Overly broad searches are unreasonable for Charter purposes.
The court found that the request the OSC made of Binance was overly broad and therefore unreasonable.
The breadth of the OSC’s request is difficult to overstate. it requested of Binance “all communications regarding Ontario (or Canada generally) among directors, officers, employees, contractors, agents and consultants of Binance Holdings Limited and related entities.”
Put differently, this was a request for “all communications between virtually anyone that may have managed, been employed by or done work for either Binance or its related entities over a two-and-a-half-year period relating not only to Ontario but to all of Canada, regardless of the subject matter of those communications.”
While Section 8 of the Charter is most often applied in the criminal law context, it applies to regulatory investigations as well. The analysis is nuanced, as in the criminal context an investigator is reviewing a specific offence and their seizure powers are limited to documents that are “strictly relevant to the offence under investigation.”
In contrast, a regulatory investigation is often concerned with general compliance inquiries that may be made without reasonable grounds or even reasonable suspicion that an offence has occurred. As a result, demands for documentary production can be broader than those made in a criminal investigation.
But regulatory requests must still be made for a proper regulatory purpose. And demands made in a subpoena that are broader than needed for the purposes of the regulatory inquiry can be set aside by the courts. That is precisely what occurred in Binance.
Noting the significant expense involved in such a broad request, the court held that even if the OSC cannot identify whether a particular document may be relevant until it has received it, it can at least target inquiries to “categories of documents that are reasonably likely to contain relevant documents.” Or, “describe the scope of [the OSC’s] inquiry in a way that would enable the regulated party and the courts to identify relevant documentation.” The OSC fails to do so at its peril.
Auto-delete messaging
In a brief aside, the court also commented on the use of technology that automatically deletes communications. The court’s comments on Binance’s use of Signal are particularly relevant for firms that rely on encrypted or auto-delete messaging platforms.
The court declined to infer regulatory obstruction from the use of such technology alone — an important clarification as privacy-focused communications tools become more common in financial services.
Specifically, it commented on the use of the Signal texting platform by Binance. One feature of Signal is that it has an automatic delete function for users particularly concerned with privacy and confidentiality. The court rejected the argument that the use of Signal by Binance supported an inference that Binance was attempting to “defeat regulatory oversight.”
Given the increasing prevalence of cryptocurrency in the Canadian capital markets, and the use of a variety of messaging platforms with a privacy focus, this is a notable development. Of course, this determination turned on the facts of this particular case and does not necessarily close the door on such an inference being made in different circumstances.
Three takeaways
The Binance decision confirms that while securities regulators have broad powers to compel the production of documents, they are not without limits. The courts offer oversight of these powers. For a burdensome request or a request touching on multiple jurisdictions, it is worth considering whether a Charter challenge is warranted.
Key takeaways for capital market participants:
- Regulators must target document requests to clearly-defined categories, reasonably related to their inquiry.
- Firms should maintain records demonstrating cooperation and proportionality in responding to OSC requests.
- Where a production demand is extremely broad or cross-border, legal counsel should consider asserting Charter protections early.