Beyond Borders, Within Reach: Criminal Restraint Order Issued for Crypto Held in Cross‑Border Exchange Structures
In R. v Binance Holdings Limited, 2025 ONSC 7113, the Ontario Superior Court of Justice (the Court) issued a significant decision on the reach of Canada’s criminal restraint and management regime as it applied to cryptocurrency held through cross‑border exchange structures.
In an application brought by the Attorney General of Ontario (the Attorney General) under sections 490.8(1) and 490.81(1) of the Criminal Code, the Court considered whether it had jurisdiction to restrain and manage bitcoin that was traced to three Binance accounts allegedly linked to an online fraud. Although the accounts were held by Binance's asset manager, a Seychelles entity, the Attorney General successfully argued that several related Binance entities had constructive possession of the property and were present in Canada – physically or by "virtual presence" – so that effective orders could be issued to preserve offence‑related property.
Background
This case arose in the context of an online fraud allegedly perpetrated by three Nigerian individuals who had caused a Canadian victim to transfer approximately C$65,000 in bitcoin to cryptocurrency wallets later tracked to three Binance accounts that were held in their names. The Attorney General applied for orders to restrain and manage the traced bitcoin as offence-related property.
The record established that Binance operates a centralized cryptocurrency exchange that sweeps and pools clients' assets into large omnibus wallets (or addresses) controlled by Binance, rather than having the assets in individual addresses under the clients' control.
The property was allegedly held by six corporate entities that are named as Respondents in the application, collectively referred to as Binance. First, Nest is the main global operator and custodian of Binance users' assets and data. Second, Binance Holdings Ltd. (BHL) is a Cayman Islands company that owned the Binance.com domain. The following four Canadian corporations were incorporated in December 2021 as part of a now-abandoned Canadian expansion of the Binance exchange platform: Binance Canada Ltd. (BCL); Binance Canada Capital Markets Inc. (BCCM) (wholly owned by BCL); Binance Canada Asset Management Inc. (BCAM); and Binance Canada Holdings Ltd. (BCH). BCL and BCCM remain active, but BCH and BCAM were dissolved in September 2023. Binance publicly withdrew from Canada in May 2023 and restricted account transactions to withdrawals.
The Respondents took the position that each of the six corporate entities is a separate entity and of the six, only Nest possessed the assets in question. The Respondent submitted that Nest does not carry on business; nor is it present in Canada. The Attorney General contended that while Nest "physically" possessed the property, the other five entities were also in possession because they were interrelated and all exercised control over the assets. This, according to the Attorney General, was sufficient to ground the Court's jurisdiction to issue a restraint order.
It was conceded that the cryptocurrency in the three identified accounts was "offence-related property" as the term is defined in the Criminal Code. It was also undisputed that Nest held the accounts to which the bitcoin was traced.
Analysis
The Court had only one issue to decide: Does the Court have the jurisdiction to issue the restraint and management orders sought by the Attorney General? Under the test set out by the British Columbia Court of Appeal in British Columbia (Attorney General) v Brecknell, 2018 BCCA 5, (Brecknell), jurisdiction turns on whether the order is directed at a person present in Canada, including by virtue of virtual presence, creating a real and substantial connection to Canada. In the Binance case, the Court reduced the inquiry to two questions: (i) what 'persons' have possession of the assets?, and (ii) whether those persons are present in Canada.
Nest's physical possession of the bitcoin was conceded. According to the Court, BHL, BCCM and BCL also had constructive possession of the bitcoin under the test set out by the Supreme Court in R v Morelli, 2010 SCC 8, at para. 17. BHL and BCCM had specific knowledge of the assets and their character, kept those assets with Nest for the use or benefit of others, and had demonstrated control over these assets through various undertakings and reports submitted to the Ontario Securities Commission (OSC). For BCL, control over its subsidiary BCCM and active participation in Ontario litigation were sufficient to find constructive possession of the bitcoin. No constructive possession was found by BCAM or BCH because both were dissolved.
Regarding presence in Canada, the Court easily found that BCL and BCCM were present in Canada as Canadian corporations with registered offices in Alberta. With respect to Nest and BHL, both foreign entities, the Court applied the Brecknell test. The Court found that Nest, a Seychelles-incorporated entity, had a sufficient virtual presence in Canada, which was established through Binance's own reporting to the OSC: approximately 248,114 Ontario accounts, holdings of roughly $35,815,317 at the relevant time and continued transactional functionality for Ontario users. Collectively, these elements established that Nest carried on business in Canada and were thus sufficient to constitute virtual presence in Canada, in accordance with the case law.
By contrast, BHL, a Cayman Islands–incorporated entity, had not contracted with Canadian customers and lacked sufficient Canadian business activity to meet the virtual presence threshold. The Court therefore found BHL was not "present" in Canada. The Attorney General submitted the alternative argument that the Binance entities should be treated as a unified enterprise for the purposes of Criminal Code orders and invited the Court to lift the corporate veil of BHL. While the Court acknowledged Binance's interwoven operational reality and the opacity of its internal lines to the public and courts, it reiterated that veil‑lifting in Ontario is exceptional and confined to narrow circumstances (such as where a company is used as a façade to conceal true facts). The Court found veil‑lifting unnecessary because effective orders could be issued against BCL, BCCM and Nest to secure the bitcoin. Accordingly, the Court issued restraint and management orders against BCL, BCCM and Nest. It declined to issue orders against BHL, BCAM or BCH. In doing so, it emphasized a practical, evidence‑based approach: tie orders to entities shown to possess the assets and to be present in Canada, including by virtual presence, without overreaching corporate separateness.
Key Takeaways
The decision should serve as a cautionary road map for structuring exchange groups and defining where functions "live." The Court's emphasis on the need to guarantee effective preservation of cryptoassets linked to crime is also noteworthy.
First, Canadian authorities' reach will turn on possession and presence, not labels. If a Canadian entity – or a foreign affiliate with some virtual presence – has knowledge and control over client assets in omnibus wallets, it risks being treated as having constructive possession. That can ground Canadian restraint and management orders even when the wallets are held offshore.
Second, "virtual presence" in Canada rests on crypto exchanges' own operational footprint. User counts, asset values and ongoing functionality for Canadian accounts or users can establish that a foreign crypto manager is carrying on business in Canada. This, in turn, can provide the basis for a Canadian restraint and management order across structures, even offshore ones.
Third, corporate separateness still matters – but only if roles are real and respected. Ontario courts will not casually lift the veil, but they will examine how entities actually operate. A corporation whose entities operate without any apparent distinction between them could, where a risk of evasion is found, be subject to a restraint order irrespective of the corporate veil.
