Court File and Parties
ONTARIO SUPERIOR COURT OF JUSTICE
(Toronto Region)
IN THE MATTER OF an Application by the Attorney General for Ontario for an Order restraining certain property pursuant to s. 490.8(1) of the Criminal Code
AND IN THE MATTER OF an Application by the Attorney General for Ontario for a Management Order pursuant to s. 490.81(1) of the Criminal Code
B E T W E E N:
hIS MAJESTY THE KING
Applicant
- and -
MAYOMI VICTOR TAPERE, ADANIEL OBINNA MADUBUIKE and DESMOND OKECHUKWU AMADI
- and -
BINANCE HOLDINGS LIMITED, NEST SERVICES LIMITED, BINANCE CANADA CAPITAL MARKETS, BINANCE CANADA ASSET MANAGEMENT INC., BINANCE CANADA LTD. and BINANCE CANADA HOLDINGS LTD. (“BINANCE”)
Respondents
Michael Fawcett and Mark Luimes, for the Applicant Crown
Graeme A. Hamilton, Teagan Markin, Brianne Taylor and Sabrina Chehade, for the Respondents, Binance Holdings Limited, Nest Services Limited, Binance Canada Capital Markets, Binance Canada Asset Management Inc., Binance Canada Ltd. and Binance Canada Holdings Ltd.
HEARD: November 1 and 4, 2024; January 9 and 13; February 27; and April 8, 2025
M. FORESTELL J.
REASONS FOR RULING
Overview of the Proceedings
1This is an application by the Attorney General for Ontario for orders of restraint and management of offence-related property pursuant to ss. 490.8(1) and 490.81(1) of the Criminal Code, R.S.C., 1985, c. C-46 (the “Code”). The Application seeks to restrain and manage cryptocurrency held by the proposed subjects — six interrelated corporate entities named as respondents to this application that operate as cryptocurrency exchanges (referred to in these reasons collectively as “Binance”).
2It is alleged that a victim in Canada was defrauded by the three named Respondents (Messrs Tapere, Madabuike and Amadi). These individuals are alleged to have caused the victim to transfer Bitcoin (“BTC”) worth approximately $65,000.00 to cryptocurrency wallets. Investigators traced the BTC to three accounts. A production order served on Binance produced evidence that the accounts are in the names of these three named Respondents who are Nigerian citizens. It has been conceded that the cryptocurrency in the three accounts identified in this application is “offence-related property” as that term is defined in the Code.
3The accounts are held by one of the named corporate entities, Nest Services Limited, with a head office in the Seychelles. The accounts have been voluntarily frozen by Binance since Binance was notified of the fraud in 2021.
4The application in relation to the accounts has an unusual history. On March 7, 2023, the Durham Regional Police Service (“DRPS”) applied to the Ontario Court of Justice for a General Warrant to seize the cryptocurrency in the accounts. On March 20, 2023, Burstein J. dismissed the application. Before a general warrant may issue, the Criminal Code requires that there be “no other provision” in the Code or any other Act of Parliament which would provide authority for the procedure at issue. Justice Burstein held that the DRPS had failed to establish that there was no other provision available. He observed that there are a “variety of legal mechanisms” which would have authorized the recovery of property obtained by the commission of an offence, including s. 462.33 of the Code.1
5On May 11, 2023, the DRPS brought an application for certiorari to the Superior Court of Justice to review Burstein J.’s decision. On April 2, 2024, Bale J. dismissed that application largely for the reasons given by Justice Burstein. Justice Bale found that there are provisions in the Code permitting the restraint of cryptocurrency. In particular, he identified ss. 462.321, 462.33 and 462.331 which permit the seizure, restraint, and management of digital assets. Justice Bale noted that the Attorney General agreed to notify Binance if an application under Part XII.2 was made.2
6The Attorney General then brought an ex parte application to this Court under Part XV, sections 490.8(1) and 490.81(1) of the Code for an order of Restraint and Management of the cryptocurrency held by Binance as offence-related property. Because of the undertaking given in the proceedings before Bale J., I required the application to be brought on notice to Binance.
7Binance opposed the application on jurisdictional grounds. A hearing was scheduled for January 13, 2025. On January 10, 2025, the Respondents filed their factum which identified one of the issues in the matter as being whether there is prescriptive legislative jurisdiction under ss. 490.8 and 490.81 of the Code to seize the accounts. Binance advanced the position that because prescriptive legislative jurisdiction was implicated, the test to be applied is the test enunciated in Unifund Assurance Co. v. Insurance Corp. of British Columbia3 and reaffirmed in Sharp v. Autorité des marchés financiers (the “Unifund test”).4
8Binance did not dispute that there were reasonable grounds to believe that the cryptocurrency accounts that were the subject of the application were offence-related property. However, in the cross-examination of the affiant, Taryn Snow, Binance questioned the affiant about the reliability of the cryptocurrency tracing that led the investigators to the subject accounts. The Attorney General objected on grounds of relevance.
9Binance argued that the reliability of the tracing was relevant to the jurisdictional issue because, under the Unifund test, one of the issues to be determined is whether the principles of order and fairness support the extraterritorial reach of the court. Binance argued that this determination required a consideration of the tracing generally as it impacts on the accountholders.
10At the time, I allowed the line of questioning as I was of the view that it was of some limited relevance to fairness, if the Unifund test applied.
11The hearing was subsequently adjourned at the request of the Attorney General. The Attorney General had been taken by surprise by the argument advanced by the Respondent and by the issue of the reliability of cryptocurrency tracing. The Attorney General requested time to respond to the issue.
12The matter was then rescheduled for June of 2025.
13Before the return date, the Attorney General brought the matter forward to ask to argue the legal issue of the applicability of the Unifund test in advance of the continuing hearing. If a determination was made that the Unifund test has no application, the cryptocurrency tracing issue would no longer have any relevance. This would obviate the need for further evidence on this point. I agreed to determine this issue in advance of the continuing hearing.
14On April 8, 2025, the parties argued the legal issue of the applicable test. I also asked the parties to readdress the issue of the relevance of the cryptocurrency testing. Specifically, I indicated that, having had a further opportunity to consider the Unifund test, I was reconsidering the relevance of the reliability of the tracing even if the Unifund test applied.
Issues
15Therefore, the two issues that were addressed at the April 8, 2025, hearing were:
(i) Does the Unifund test apply?5
and,
(ii) Even if the Unifund test does apply, is the reliability of the cryptocurrency tracing relevant to any issue before the court?
16For the reasons set out below, I have concluded that the Unifund test has no application to this case. The reliability of the cryptocurrency tracing therefore has no relevance.
The Legal Principles
Statutory Framework
17Sections 490.8 and 490.81 provide as follows:
490.8 (1) The Attorney General may make an application in accordance with this section for a restraint order under this section in respect of any offence-related property.
(2) An application made under subsection (1) for a restraint order in respect of any offence-related property may be made ex parte and shall be made in writing to a judge and be accompanied by an affidavit sworn on the information and belief of the Attorney General or any other person deposing to the following matters:
(a) the indictable offence to which the offence-related property relates;
(b) the person who is believed to be in possession of the offence-related property; and
(c) a description of the offence-related property.
(3) Where an application for a restraint order is made to a judge under subsection (1), the judge may, if satisfied that there are reasonable grounds to believe that the property is offence-related property, make a restraint order prohibiting any person from disposing of, or otherwise dealing with any interest in, the offence-related property specified in the order otherwise than in the manner that may be specified in the order.
(3.1) A restraint order may be issued under this section in respect of property situated outside Canada, with any modifications that the circumstances require. [emphasis added]
(4) A restraint order made by a judge under this section may be subject to any reasonable conditions that the judge thinks fit.
(5) A restraint order made under this section shall be made in writing.
(6) A copy of a restraint order made under this section shall be served on the person to whom the order is addressed in any manner that the judge making the order directs or in accordance with the rules of the court.
(7) A copy of a restraint order made under this section shall be registered against any property in accordance with the laws of the province in which the property is situated.
(8) A restraint order made under this section remains in effect until
(a) an order is made under subsection 490(9) or (11), 490.4(3) or 490.41(3) in relation to the property; or
(b) an order of forfeiture of the property is made under section 490 or subsection 490.1(1) or 490.2(2).
(9) Any person on whom a restraint order made under this section is served in accordance with this section and who, while the order is in force, acts in contravention of or fails to comply with the order is guilty of
(a) an indictable offence and liable to imprisonment for a term of not more than five years; or
(b) an offence punishable on summary conviction.
490.81 (1) With respect to offence-related property other than a controlled substance within the meaning of the Controlled Drugs and Substances Act or cannabis as defined in subsection 2(1) of the Cannabis Act, on application of the Attorney General or of any other person with the written consent of the Attorney General, a judge or justice in the case of offence-related property seized under section 487, or a judge in the case of offence-related property restrained under section 490.8, may, if he or she is of the opinion that the circumstances so require,
(a) appoint a person to take control of and to manage or otherwise deal with all or part of the property in accordance with the directions of the judge or justice; and
(b) require any person having possession of that property to give possession of the property to the person appointed under paragraph (a).
(2) When the Attorney General of Canada so requests, a judge or justice appointing a person under subsection (1) shall appoint the Minister of Public Works and Government Services.
(3) The power to manage or otherwise deal with property under subsection (1) includes
(a) the power to make an interlocutory sale of perishable or rapidly depreciating property;
(b) the power to destroy, in accordance with subsections (4) to (7), property that has little or no value; and
(c) the power to have property, other than real property or a conveyance, forfeited to Her Majesty in accordance with subsection (7.1).
(7.1) On application by a person who is appointed to manage the property, a court shall order that the property, other than real property or a conveyance, be forfeited to Her Majesty to be disposed of or otherwise dealt with in accordance with the law if
(a) a notice is given or published in the manner that the court directs or that may be specified in the rules of the court;
(b) the notice specifies a period of 60 days during which a person may make an application to the court asserting their interest in the property; and
(c) during that period, no one makes such an application.
(8) A management order ceases to have effect when the property that is the subject of the management order is returned in accordance with the law, destroyed or forfeited to Her Majesty.
(8.1) For greater certainty, if property that is the subject of a management order is sold, the management order applies to the net proceeds of the sale.
(9) The Attorney General may at any time apply to the judge or justice to cancel or vary any condition to which a management order is subject, but may not apply to vary an appointment made under subsection (2).
18Offence-related property is defined in s. 2 of the Code:
offence-related property means any property, within or outside Canada,
(a) by means or in respect of which an indictable offence under this Act or the Corruption of Foreign Public Officials Act is committed,
(b) that is used in any manner in connection with the commission of such an offence, or
(c) that is intended to be used for committing such an offence;
Statutory Interpretation, Extraterritoriality and the “Unifund Test”
19Provincial legislatures cannot legislate extraterritorially. Provincial legislation is presumed to not apply extraterritorially. In Unifund, the Supreme Court of Canada developed a test to determine whether provincial legislation could apply to an out-of-province defendant. The test operates to limit impermissible extraterritorial application of provincial law by “reading down” general language so as not to contravene the presumption against extraterritoriality.6
20The four propositions that make up the Unifund test are set out at paragraph 56 of the judgment:
The territorial limits on the scope of provincial legislative authority prevent the application of the law of a province to matters not sufficiently connected to it;
What constitutes a sufficient connection depends on the relationship among the enacting jurisdiction, the subject matter of the legislation and the individual or entity sought to be regulated by it;
The applicability of an otherwise competent provincial legislation to out-of-province defendants is conditioned by the requirements of order and fairness that underlie our federal arrangements;
The principles of order and fairness, being purposive, are applied flexibly according to the subject matter of the legislation.
21Federal legislation is presumed to apply to all persons, things, and events within Canada.7
22The federal government may legislate with extraterritorial effect although it is presumed not to do so “in the absence of clear words or necessary implication to the contrary”8.
23Although the Unifund case addressed the extraterritoriality of provincial legislation, the test was acknowledged in Sharp to be the accepted test for “discerning the presumptively intended reach of federal legislation” as well.9
Types of Jurisdiction and the “Brecknell Test”
24Some of the caselaw distinguishes between prescriptive jurisdiction, enforcement jurisdiction and adjudicative jurisdiction. The characterization of restraint and management orders as prescriptive jurisdiction is central to the position of the Respondent Binance. Prescriptive jurisdiction generally refers to the legislative power of the state. In R. v. Hape, it is defined as “the power to make rules, issue commands or grant authorizations that are binding on persons and entities”.10 Enforcement jurisdiction is defined as “the power to use coercive means to ensure that rules are followed, commands are executed or entitlements are upheld”.11
25In Sharp, the court characterized the Unifund test as part of a “family of tests to emphasize that the same formula of words — that is, ‘real and substantial connection’ —involves different considerations in each of the varying contexts in which the formula is employed”.12
26The Unifund test relates to “prescriptive legislative jurisdiction”.13
27In British Columbia (Attorney General) v. Brecknell,14 Harris J.A. considered the different kinds of jurisdiction identified in Hape and characterized production orders as ‘arguably’ implicating enforcement jurisdiction. Justice Harris found, however, that the jurisdictional label was not relevant and that the issue was whether, on the facts of that case, the production order sought should be viewed as having extraterritorial effect.
28The Supreme Court of Canada held in Quebec (Procureur general) v. Laroche15 that a restraint order is a seizure. A restraint order is intended to place property under the legal and actual control of the justice system. Binance argues that Brecknell must be distinguished from the case at bar because, in Brecknell, the court drew a distinction between the production of documents pursuant to a production order and a seizure. This mischaracterizes the distinction drawn in Brecknell. The court in Brecknell distinguished a production order from a search warrant. The court did not suggest that a production order is not a seizure. At paragraph 46 of Brecknell, the court explained that a production order does not authorize the entry into a place by state agents. The location of documents that are the subject of a production order is irrelevant to the essence of the order. The impact on a privacy interest is not specific to a physical place or geographic location. In this way, the court held, the “territorial dimension of place…may be seen as being significantly attenuated”.16
29The court in Brecknell held, at paragraph 26, that whether a production order is viewed as having extraterritorial effect turns on “characterizing where the order takes effect and whether it is properly regarded as directed against a person in Canada”. Physical or virtual presence of the person or entity in possession of the records was held to be sufficient to establish a ‘real and substantial connection” to Canada and to ground jurisdiction for the order.
30This approach was adopted by the Alberta Court of Appeal in R. v. Love,17 by Kenkel J. of the Ontario Court of Justice in Re Application for a Production Order, s.487.014 of the Criminal Code,18 and by Tzimas J. of this court in In the Matter of the Production of Records from textPlus Inc.19
Application of the Law
31I accept that the Attorney General must satisfy some form of a “reasonable and substantial connection” test before orders for restraint and management of the offence-related property can issue. Sharp made it clear that the form of the test will depend on the context.
32In this case, the context is an order that is properly characterized as a seizure of property held by a third party pursuant to legislation that explicitly permits the seizure of property held outside Canada. The order is akin to a production order. Unlike a production order, however, the language of the section makes it clear that the location of the property outside Canada is not a bar to the issuance of the order.
33In Brecknell, in the context of an application for a production order, the court applied a version of the real and substantial connection test grounded in physical or virtual presence, in Canada, of the entity in possession of the records.
34I have concluded that the Brecknell test for jurisdiction should be applied in this case.
35I find that the Unifund test does not apply for several reasons.
36First, the explicit words of the relevant legislation authorize the extraterritorial reach of the sections in question to capture property held outside of Canada. Offence-related property is defined as property within or outside Canada by means of which an indictable offence has been committed or that is used in any manner in connection with the commission of such an offence. Section 490.8(3.1) provides that a restraint order may be issued in respect of property situated outside Canada. This language distinguishes the case from Unifund and Sharp.
37Further, I do not accept that the issuance of an order under the legislation is an exercise of “prescriptive legislative jurisdiction”. The issuance of an order of restraint and management, like a production order, is better characterized as requiring “enforcement” or “investigative” jurisdiction. This further distinguishes the case from Unifund.
38Binance has also argued that because there will be an impact on the out-of-country account holders if the orders sought in this case are granted, the Unifund test must apply. I disagree. The impact of the orders is the seizure of offence-related property that is outside Canada. The impact is on the property. While this is an extraterritorial impact, it is authorized by the clear language of the legislation. The Unifund test must be applied where the legislation is broadly framed to avoid impermissible extraterritorial effect. Where, as in this case, the extraterritorial effect is clearly intended, the test does not apply.
Conclusion
39I find that the Unifund test does not apply in this case. In the circumstances therefore, the reliability of the tracing of the cryptocurrency is irrelevant.
40I note in closing that the position of the Attorney General is that there is jurisdiction for the order if Binance is present in Canada. No further requirements need be met to establish jurisdiction. For the purposes of this case, the Attorney General has taken the position that no order would be pursued for the restraint and management of the offence-related property if this court concludes that Binance is not present in Canada. As a result, I have not considered the issue of whether jurisdiction would exist for the court to order the restraint and management of offence-related property under these sections for property possessed by an entity with no presence in Canada. Whether such jurisdiction exists and what test should be applied are not questions before me.
M. Forestell J.
Released: May 5, 2025
CITATION: R. v. Binance Holdings Limited, 2025 ONSC 2753
COURT FILE NO: CR-24-10000111-00MO
DATE: 20250505
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
his majesty the king
- and -
MAYOMI VICTOR TAPERE, ADANIEL OBINNA MADUBUIKE and DESMOND OKECHUKWU AMADI
- and -
BINANCE HOLDINGS LIMITED, NEST SERVICES LIMITED, BINANCE CANADA CAPITAL MARKETS, BINANCE CANADA ASSET MANAGEMENT INC., BINANCE CANADA LTD. and BINANCE CANADA HOLDINGS LTD. (“BINANCE”)
REASONS FOR RULING
M. Forestell J.
Released: May 5, 2025
Footnotes
- Re Application for General Warrant, s. 487.01 Criminal Code, 2023 ONCJ 129, at para. 10.
- Durham Regional Police Service (Re), 2024 ONSC 1928, at para. 74.
- 2003 SCC 40, [2003] 2 S.C.R. 63.
- 2023 SCC 29, 487 D.L.R. (4th) 467.
- The AG framed the issue as an application to exclude the factum of the Respondent. In my view, the issue is properly framed as the determination of the discrete legal issue of the appropriate test to be applied on the jurisdictional question.
- Unifund, at paras. 50-56.
- Ruth Sullivan, The Construction of Statutes, 7th ed., 26.02.
- Society of Composers, Authors and Music Publishers of Canda v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427, at para. 54; R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292, at paras. 35-46.
- Sharp, at para. 110, citing Sullivan, The Construction of Statutes, at p. 806.
- Hape, at para. 58; Sharp, at para. 115.
- Hape, at para. 58.
- Sharp, paras. 117-125.
- Sharp, at para. 115.
- 2018 BCCA 5, 358 C.C.C. (3d) 179.
- 2002 SCC 72, [2002] 3 S.C.R. 708.
- Brecknell, at para. 46.
- 2022 ABCA 269, 417 C.C.C. (3d) 267.
- 2019 ONCJ 775.
- 2022 ONSC 7413.