Canada Hits Crypto Firm With $126 Million Fine

Canada’s Financial Intelligence Agency has imposed a record $126 million (C$176.9 million) fine on cryptocurrency platform Cryptomus for several violations of money laundering laws, citing the failure to report thousands of suspicious transactions related to child exploitation, ransomware and sanctions evasion.

The Vancouver-based company, registered federally as Xeltox Enterprises Ltd. and doing business as Cryptomus, failed to file more than a thousand suspicious transaction reports and more than 1,500 high-value crypto transaction reports in July 2024 alone, according to statement the Canadian Financial Transactions and Reports Analysis Center (FINTRAC) announced on Wednesday.

The fine marks FINTRAC’s largest enforcement action to date. The $126 million fine is nearly nine times the $14 million fine that was imposed KuCoin operator last month. Earlier in May, FINTRAC also fined Canadian subsidiary of Binance 6 million Canadian dollars for similar registration and reporting of violations.

Both previous cases involved failures to register as money services firms and reports of large or suspicious transactions.

Vulnerabilities in Canada’s virtual currency sector “significantly undermine transparency and accountability and make the sector as a whole vulnerable to exploitation by illicit actors,” FINTRAC recorded in a separate statement.

FINTRAC said the crypto platform’s failings covered up activities related to child sexual abuse material, ransomware, fraud and Iran-related transfers, calling the company’s compliance controls, policies and procedures “incomplete and inadequate.”

The watchdog’s investigation identified 2,593 different violations, including 1,068 failures to report suspicious transactions and 1,518 unreported large-value crypto transfers in one month. The agency also cited violations of the ministerial directive demanding increased monitoring of Iran-related transactions, noting that 7,557 such transfers between July and December 2024 went unchecked and unreported.

The investigators found further irregularities in the company’s operations.

The Vancouver address listed for Xeltox Enterprises was a rented post office box, with no evidence of Canadian personnel or physical presence. FINTRAC added that the communications during the compliance investigation originated from Uzbekistan and Spain, as the crypto firm “had no employees working in Canada.”

Decipher has reached out to the agency and the crypto platform for comment and will update this article if they respond.