A Canadian financial intelligence agency has imposed a record-breaking fine of nearly $177 million on a cryptocurrency exchange for various violations, including neglecting to flag over 1,000 transactions associated with criminal activities. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) disclosed the penalty against Xeltox Enterprises Ltd., operating under the name Cryptomus and previously known as Certa Payments Ltd.
This fine of $176,960,190 surpasses the previous highest penalty of approximately $20 million imposed by FINTRAC on Peken Global Ltd, the operator of the cryptocurrency firm KuCoin. The Director and CEO of FINTRAC, Sarah Paquet, stated that the violations in the Cryptomus case, linked to offenses such as trafficking in child sexual abuse material, fraud, ransomware payments, and sanctions evasion, necessitated this significant enforcement action.
FINTRAC identified 1,068 instances where Cryptomus failed to report transactions involving darknet markets and virtual currency wallets associated with criminal activities. Darknet markets are online platforms where illegal goods and services are traded anonymously, while virtual currencies conceal the identity of users, making them vulnerable to illicit activities.
Additionally, Cryptomus did not report 7,557 transactions originating from Iran between July 1 and December 31, 2024, violating money laundering laws and ministerial directives related to transactions with Iran. These transactions were supposed to be treated as high risk, with obligations to verify identities, conduct due diligence, maintain transaction records, and report to FINTRAC, which Cryptomus failed to fulfill.
Furthermore, FINTRAC discovered 1,518 transactions in July 2024 that met the reporting threshold for large virtual currency transfers, which Cryptomus did not report. The agency also highlighted deficiencies in Cryptomus’ policies and procedures related to ongoing monitoring and client identification obligations.
In May, the B.C. Securities Commission had already banned Cryptomus from trading securities and other market activities. FINTRAC issued a record 23 violation notices in the 2024-25 period, totaling over $25 million in penalties, marking the highest number of notices in a single year in its history. Since obtaining legislative authority in 2008, FINTRAC has imposed more than 150 penalties.
Overall, the significant fine imposed on Cryptomus underscores the importance of compliance with anti-money laundering and counter-terrorism financing regulations in the cryptocurrency industry.
