Executive Summary: Key Legal and Evidentiary Issues

• Whether Ontario courts had jurisdiction simpliciter over a foreign fintech company based on presence, consent, or a real and substantial connection
• Extent to which a globally accessible website and account-opening process for offshore payment services amounts to “carrying on business” in Ontario
• Location of alleged misrepresentations and where they were received or relied on for negligent and fraudulent misrepresentation claims
• Sufficiency and reliability of the plaintiff’s evidence about where he traded, where funds originated, and where financial loss was actually suffered
• Whether an online crypto “on-ramp” and related activities created a presumptive connecting factor without resulting in impermissible “universal jurisdiction”
• Impact of foreign incorporation, foreign regulation, and absence of Canadian registration, offices, or employees on jurisdiction over an alleged civil conspiracy

Facts of the case

The plaintiff, Alexandre Iakovlev, brought an action in Ontario against ePayments Systems Limited and others, seeking damages for alleged misrepresentation and civil conspiracy arising out of his use of a crypto asset trading platform operated by DSX Global (UK) Limited. He claimed to have purchased six bitcoins through funds deposited via ePayments and held those bitcoins on the DSX Global platform. DSX Global later went bankrupt, and the plaintiff alleged he thereby lost the six bitcoins.

According to the amended statement of claim, ePayments was a digital payment company closely integrated with DSX Global. The plaintiff alleged that a large portion of ePayments’ revenue was derived from transactions related to DSX Global, such as fiat deposits to DSX accounts and crypto transfers on the DSX trading platform. ePayments allegedly provided the “on-ramp” for users, including the plaintiff, to move fiat currency onto the platform to buy crypto assets.

The plaintiff pleaded that in October 2017 he went through an online registration process to open and use accounts tied to the DSX Global platform. That registration required provision of personal information such as jurisdiction for trading and address of residence. In his pleading, he alleged he supplied official identification documents showing he was an Ontario resident and that ePayments agreed to provide crypto asset trading services within his Ontario jurisdiction. He claimed he could access the platform from an IP address linked to his home in Toronto and that he disclosed his Ontario residency to the defendants while being approved to trade crypto from his Toronto home.

The claim further alleged there was a broader scheme (the “DSX Scheme”) in which DSX Global and ePayments held out the DSX platform as a fully compliant, fully regulated crypto asset trading platform, despite allegedly operating in Canada without registration under Canadian securities laws and in breach of Canadian anti-money laundering laws. As part of that scheme, ePayments was said to have: (a) permitted onboarding of the plaintiff despite his residing in a jurisdiction where the platform could not lawfully operate; (b) accepted funds through its website and facilitated transfers of funds to the DSX platform from a Canadian resident’s account; and (c) closely integrated its organization with the platform, thereby supposedly lending a false aura of regulatory legitimacy.

On this basis, the plaintiff alleged that the defendants, including ePayments, made representations about regulatory compliance and platform security with knowledge of their falsity, or at least recklessly, intending to induce users such as him to transfer and exchange funds on the platform. He further alleged that, but for these representations, he would have acquired his bitcoins through another provider and would not have suffered the loss tied to DSX Global’s bankruptcy.

Procedural posture and motion brought by ePayments

ePayments, a United Kingdom company headquartered in London, brought a motion before the Ontario Superior Court of Justice seeking to dismiss the action against it. The defendant argued, first, that the Ontario court had no jurisdiction simpliciter over it; and, in the alternative, that Ontario was forum non conveniens and the action should be stayed. The motion focused on principles of private international law and the framework for asserting jurisdiction over foreign defendants in cases involving online financial services and crypto-related activities.

ePayments did not defend on the merits and did not attorn to Ontario’s jurisdiction. The plaintiff did not argue consent-based jurisdiction. Instead, he relied on two possible bases: presence-based jurisdiction (on the theory that ePayments was carrying on business in Ontario) and assumed jurisdiction (on the basis that there was a real and substantial connection between Ontario and the subject matter of the litigation).

Jurisdictional framework applied by the court

The court applied the well-established tripartite framework for asserting jurisdiction over an out-of-province defendant: presence-based jurisdiction, consent-based jurisdiction, and assumed jurisdiction. For presence-based jurisdiction, the court drew on Supreme Court of Canada authorities such as Chevron and Club Resorts Ltd. v. Van Breda, which require that a corporation be “carrying on business” in the jurisdiction with some actual, not merely virtual, presence, typically reflected in physical premises, registration, employees, or other sustained local business activity. Simply operating a website accessible from Ontario, or generally advertising online, is not enough.

For assumed jurisdiction, the court applied the “real and substantial connection” test and the presumptive connecting factors in Van Breda: (a) the defendant is domiciled or resident in the province; (b) the defendant carries on business in the province; (c) the tort was committed in the province; and (d) a contract connected with the dispute was made in the province. Each factor, if established, can presumptively ground jurisdiction, but the defendant may rebut this by showing the factor does not in fact point to a meaningful relationship between the dispute and Ontario.

The court also relied on recent Ontario cases dealing with foreign online platforms and financial services—such as Yip v. HSBC Holdings plc and Shirodkar v. Coinbase Global Inc.—which grapple with how far Ontario courts may extend jurisdiction based on online access, downloading materials, or making trades from Ontario, without effectively asserting “universal jurisdiction” over global internet-based activities.

Evidence about ePayments’ business and connections to Ontario

The evidence showed that ePayments was incorporated and headquartered in the United Kingdom, operated as an electronic money institution authorized by the UK Financial Conduct Authority, and functioned as a payment processor moving funds between online wallets. All officers, directors, and employees were located in the UK, and its servers were located within the European Union. It had no physical offices, employees, or agents in Ontario or elsewhere in Canada. It was not registered as an extra-provincial corporation in Ontario, held no Canadian regulatory licences, and had not targeted advertising to Ontario residents.

While the ePayments website and client accounts were globally accessible, including from Ontario, and ePayments had clients in over 100 countries, the plaintiff’s own registration details indicated that when he opened his ePayments account he identified himself as a Russian citizen residing in Moscow. This contradicted his pleading that he supplied Ontario identification at registration. The evidence from ePayments’ records suggested all of his logins were from Russia.

The plaintiff responded that the online registration process showed deliberate global targeting because dropdown menus allowed users to identify Canada as their citizenship country and as a delivery address for an ePayments prepaid Mastercard. He also asserted he accessed the DSX platform and conducted trading activities both from Russia and Ontario. The court, however, found that while DSX Global was registered in the UK as a payment service agent for ePayments, there was no evidence of any more substantial operational presence in Ontario by either entity beyond the ability to access accounts online from Canada.

Analysis of presence-based jurisdiction

In assessing presence-based jurisdiction, the court concluded that ePayments was not “carrying on business” in Ontario in the sense required by the case law. The company had no physical office, no registration as an extra-provincial corporation, no Canadian licences, and no employees or key decision-makers in Ontario. Its entire operating structure was based in the UK and the EU.

The court held that the mere fact that ePayments’ website and accounts could be accessed from Ontario, and that users could select “Canada” in dropdown menus for citizenship or card-delivery address, did not amount to an actual, substantial business presence in Ontario. Nor did the alleged close integration with DSX Global, itself a foreign entity with no meaningful connection to Canada beyond being accessible online. The court stressed that this type of virtual, passive presence does not satisfy the standard for presence-based jurisdiction, and therefore Ontario lacked jurisdiction on that ground.

Analysis of consent-based jurisdiction

Consent-based jurisdiction was quickly disposed of. ePayments had not delivered a defence on the merits or otherwise attorned to Ontario’s jurisdiction, and there was no prior agreement to litigate in Ontario. The plaintiff did not argue otherwise. Consequently, there was no consent-based jurisdiction.

Assumed jurisdiction: carrying on business and situs of the torts

Turning to assumed jurisdiction, the court considered the four presumptive connecting factors from Van Breda. It was undisputed that ePayments was not domiciled or resident in Ontario, and the plaintiff did not claim that the contract connected with the dispute was made in Ontario; he had opened his ePayments account while living and working in Russia. The plaintiff instead relied on two factors: that ePayments carried on business in Ontario and that the relevant torts were committed in Ontario.

On the first, the court repeated and applied its earlier conclusion that ePayments was not carrying on business in Ontario, even under the potentially less onerous Van Breda standard for assumed jurisdiction. The evidence did not support any actual operational presence or substantial business activity in Ontario.

On the second, the court examined where the torts of negligent and fraudulent misrepresentation and civil conspiracy were committed. For misrepresentation, Canadian law generally treats the tort as occurring where the misrepresentation is received and acted upon. The plaintiff alleged he chose DSX Global due to global accessibility and assurances that it was secure and accessible in Ontario, that he made deposits of over USD 110,000 through ePayments to the DSX platform, and that he engaged in trading activities from both Russia and Ontario.

However, the court found his evidence on where he received and relied on any alleged misrepresentations to be vague, inconsistent, and largely unsupported. The pleadings anchored the critical reliance events—registration, account opening, and purchase of the six bitcoins—in 2017 while he was living and working in Russia. There was no specific allegation or evidence of particular misrepresentations received or acted upon in Ontario, nor any detailed account of trades or actions taken from Ontario that related directly to the acquisition or loss of the six bitcoins at the core of the claim.

Even if it were assumed that he accessed the ePayments or DSX websites and read the alleged misrepresentations while physically in Ontario, the court held that this kind of mere online access from Ontario is an “extremely weak connection” for jurisdictional purposes. Following Yip and Coinbase, the court reasoned that treating simple downloading or viewing of website content from Ontario as enough to ground jurisdiction in such cases would effectively create a form of universal jurisdiction over global online financial platforms, which Canadian courts have explicitly rejected.

Civil conspiracy and the location of harm

For the civil conspiracy claim, the governing principle is that the tort occurs where the harm is suffered, regardless of where the conspiratorial acts took place. The plaintiff asserted that he suffered his financial loss in Ontario because his retirement savings, which he linked to his life and mortgage in Toronto, were the source of the funds invested on the platform.

The court found this evidence to be vague and unsupported. There was no concrete proof of any specific Ontario-based account—such as a Canadian bank account, RRSP, or other local investment—from which funds were drawn to finance the impugned transactions. Instead, the record showed that he used an Austrian Raiffeisen bank account and other foreign banks, with transactions in euros, U.S. dollars, or rubles, and no demonstrated Canadian institutional involvement. The bitcoins themselves were held on servers in the European Union, never on servers located in Ontario or Canada.

On that record, the court held that the alleged harm and loss did not occur in Ontario in the legal sense required to ground civil conspiracy jurisdiction. Accepting that an Ontario resident suffers jurisdiction-creating harm in Ontario merely because he personally feels the economic impact there, even where the assets and relevant institutions are entirely offshore, would again approach an impermissible universal jurisdiction model.

No basis for assumed jurisdiction and no need to reach forum non conveniens

Having determined that no presumptive connecting factor was adequately established—and that, even if any were assumed for argument’s sake, they would be rebutted due to the weak and essentially foreign nature of the dispute—the court concluded there was no real and substantial connection between ePayments, the subject matter of the litigation, and Ontario. Accordingly, the Ontario Superior Court could not assume jurisdiction over ePayments.

Given that determination, the court did not have to, and expressly declined to, analyze ePayments’ alternative argument that Ontario was forum non conveniens compared with another available forum such as the United Kingdom. Once jurisdiction simpliciter failed, the claim against the foreign defendant had to be dismissed.

Disposition, costs, and overall outcome

In its disposition, the court granted ePayments’ motion and ordered that the action be dismissed as against ePayments Systems Limited on the basis that the court has no jurisdiction to hear the claim against that defendant. The plaintiff’s substantive claims for misrepresentation and civil conspiracy therefore were not adjudicated on their merits in this decision; the case turned entirely on jurisdictional and evidentiary sufficiency grounds.

On costs, both parties recognized the motion’s importance and the complexity of applying established jurisdictional principles to an online, digital platform and cross-border crypto transactions. ePayments sought just over $50,000 in partial indemnity costs, while the plaintiff sought about $8,845 if he were successful. Weighing the factors under Rule 57.01(1), including proportionality to the total amount claimed in the action (approximately $195,000 plus $1,000 in punitive and related damages), the court fixed a lower but still substantial costs award. The court ordered the plaintiff to pay ePayments its costs of the motion in the amount of $25,000, inclusive of taxes and disbursements, payable within 30 days. In practical terms, the successful party in this decision is ePayments Systems Limited, and the total monetary amount ordered in its favour is $25,000 in costs; no damages were awarded to the plaintiff.