When Corporate Boundaries Blur: Lessons From R v. Binance Holdings Limited

Overview

The decision in R v. Binance Holdings Limited illustrates the complexities associated with prosecuting disputes involving crypto assets.¹ The Ontario Superior Court of Justice considered its jurisdiction in a matter involving assets with no clear physical footprint owned by a constellation of related entities, including two foreign corporations.

While the case arose from a relatively small online fraud, it has major implications for multinational crypto exchanges and foreign digital asset platforms that serve Canadians.

The Underlying Fraud and Jurisdictional Dispute

Binance involves the prosecution of a fraud in which a Canadian resident was induced to transfer $65,000 of bitcoin to the perpetrators' cryptocurrency wallets. The wallets were connected to Binance's cryptocurrency exchange.

To preserve the bitcoin, the Attorney General of Ontario (the Crown) applied for restraint and management orders under the Criminal Code. There was no dispute that the bitcoin was property related to the offence.

Rather, the contested issue concerned jurisdiction. Binance Holdings Limited (Binance) operates a centralized exchange in which client assets are held in omnibus wallets controlled by Binance, as opposed to individual account holders. That logistical factor resulted in a unique analysis by the Court, which had to rule on which entity, if any, possessed the assets and decide whether that entity was present in Canada. The analysis was further complicated by Binance's corporate structure, which included:

• Nest, the offshore custodian of client assets and data;
• Binance, the offshore owner of the Binance.com domain; and
• Four Canadian companies created for a now-abandoned expansion including Binance Canada Capital Markets Inc. (BCCM), Binance Canada Ltd. (BCL), and two entities that were dissolved in 2023.

Binance argued that the Court lacked jurisdiction to grant restraint and management orders because the only entity that had possession of the bitcoin was Nest, which had no Canadian presence. Conversely, the Crown argued that the other entities had constructive possession of the bitcoin because all the companies were interrelated and exercised control over the assets.

Constructive Possession and Virtual Presence

The Court applied the legal test from British Columbia v. Brecknell² by considering whether (i) any of the entities had possession of the bitcoin, and (ii) were present in Canada such that there was a "real and substantial connection" to Canada.

The Court ruled that it could grant the restraint and management orders against BCCM because it had "constructive possession" of the bitcoin. Namely, BCCM had control over Nest's property, which remained in Nest's custody for the benefit of another person (i.e., BCCM). BCL also had constructive possession given its ownership of BCCM. Because both entities were incorporated in Canada, they met the "presence" requirement.

Although an offshore company, Nest had a virtual presence because it carried on business in Canada. That virtual presence entitled the Court to exercise its jurisdiction because, though Canadian accounts were placed in "liquidation mode" and no new Canadian accounts could be opened, existing accountholders could conduct certain transactions for which fees were charged.

On the other hand, while BHL had constructive possession over the bitcoin, it had no presence in Canada. BHL, whose role was limited to representing Binance before the securities regulator, never contracted with Canadian customers. The fact that Binance had Canadian employees who provided services to BHL was, alone, insufficient to meet the Brecknell test.

Corporate Separateness Might Not Shield Operational Realty

Because the Court granted preservation orders by way of the Brecknell analysis, it had no reason to look behind the corporate veil and treat the Binance companies as a unified enterprise. Courts will not ignore the sanctity of corporate separateness unless warranted by exceptional circumstances (e.g., where leaving the corporate veil intact would defeat the desired effect of legislation).

However, the Court stated that the Criminal Code provision contemplating the preservation of offence-related property has extraterritorial reach and applies to property outside of Canada. Allowing Binance to invoke its corporate structure to escape a restraint order with such reach would seem to defeat the purpose of the Criminal Code provision.

Beyond Binance

The decision in Binance has broad implications on crypto regulation and prosecution, including the following:

• As a matter of law, a company may have a "presence" in Canada without a single employee if Canadian users continue to trade, pay fees, or rely on its services;
• Even where operational lines are unclear (e.g., shared wallets, pooled assets, centralized systems), Canadian courts may find constructive possession and assert jurisdiction; and
• Courts need only find that a corporate entity is meaningfully involved in controlling offence‑related property connected to Canadian activity under the Brecknell

Footnotes

1 R v. Binance Holdings Limited, 2025 ONSC 7113 ("Binance").

2 British Columbia (Attorney General) v. Brecknell, 2018 BCCA 5 ("Brecknell").

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