In Lochan v. Binance Holdings Limited, 2026 ONSC 194, released Jan. 9, Justice Edward Morgan held that Binance’s decision to commence arbitration despite prior rulings that the arbitration clause was void was vexatious and oppressive to the plaintiffs.
Justice Morgan observed that Binance had sought to hold the representative plaintiffs personally liable in the Hong Kong proceedings for any costs incurred and any damages ultimately awarded in Ontario.
“That approach by the Defendants appeared to me to have been aimed not at building a meritorious argument, but at, frankly, scaring the Plaintiffs away from their claim. The Defendants’ tactics here are to be discouraged,” the judge wrote.
The underlying action was brought by the plaintiffs, Christopher Lochan and Jeremy Leeder, over allegations that Binance engaged in the business of trading in securities without registering and distributed securities without complying with applicable prospectus requirements.
The action was certified as a class proceeding despite objections from Binance based on an arbitration clause in the cryptocurrency platform’s terms of use.
The Ontario Superior Court found that the high cost of access to the arbitral tribunal specified in the clause could effectively amount to a grant of immunity to Binance and ruled that it was void as contrary to public policy or on the basis of unconscionability. This ruling was affirmed by the Ontario Court of Appeal.
However, despite these rulings, Binance commenced arbitration proceedings against the two representative plaintiffs in Hong Kong through Nest Services Limited, a Seychelles corporation that was found to be an alter ego of Binance. Nest alleged that the plaintiffs’ decision to commence proceedings in Ontario was a breach of contract.
In Lochan v. Binance Holdings Limited, 2025 ONSC 6493, Justice Morgan granted the plaintiffs an order restraining Binance and its owners, shareholders, officers, directors, employees, agents, and representatives from commencing or continuing arbitration proceedings against the plaintiffs.
The plaintiffs sought costs on a substantial-indemnity basis in the total amount of $261,922.
Binance submitted that the cost request was excessive given that the motion took up only a half-day of court time.
Justice Morgan observed that the defendants had mounted a “large-scale attack on the Plaintiffs and on the within proceedings.”
The court observed that they had done so with the hands-on assistance of global law firm Herbert Smith Freehills Kramer handling the Hong Kong aspect of the matter, and with an expert affidavit from retired Chief Justice of Hong Kong, Geoffrey Ma Tao-Li.
“The Plaintiffs, without the assistance of a global law firm and a former Chief Justice, had to act quickly and effectively with their Ontario counsel to respond to the transnational challenge and to ward off the threat to their already certified Ontario action. That kind of lawyering is bound to cost money,” the judge wrote.
The judge also noted that Binance’s legal gamesmanship in commencing the Hong Kong arbitration in the face of prior rulings of the Ontario Superior Court and the Court of Appeal was vexatious and oppressive to the plaintiffs.
He added that while the hearing before the court was not particularly lengthy, the international jurisdictional issues were complicated.
“It took considerable effort to get there, but the hearing itself was short because the Plaintiffs managed to show that they had the Defendants ‘dead to rights’,” the judge wrote.
The court awarded the plaintiffs costs in the total amount of $261,900.
Counsel for the parties were not immediately available for comment.
Counsel for the plaintiffs were James Orr, Kyle Taylor, Johathan Careen, and Alexandra Da Dalt of Orr Taylor LLP.
Counsel for the defendants were Paul Steep, Moya Graham, Adam Kanji, and Sabih Ottawa of McCarthy Tétrault LLP.
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