Canada’s financial intelligence agency has imposed a record fine on the cryptocurrency exchange Cryptomus, amounting to $177 million. This penalty is the largest ever issued by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Cryptomus, operating under the name Xeltox Enterprises Ltd., was found guilty of multiple financial infractions.
Details of the Fine Against Cryptomus
The significant penalty of $176,960,190 far surpasses the previous record of approximately $20 million, which was levied against Peken Global Ltd., operator of KuCoin, just a month prior.
Reasons for the Fine
FINTRAC discovered that Cryptomus failed to report over 1,068 transactions linked to criminal activities. These violations included:
- Trafficking in child sexual abuse material.
- Fraudulent activities.
- Ransomware payments.
- Evading sanctions.
According to FINTRAC’s director and CEO, Sarah Paquet, the violations necessitated this unprecedented enforcement action.
Transaction Reporting Failures
Among the most concerning failures, Cryptomus did not report 7,557 transactions originating from Iran between July 1 and December 31, 2024. Due to existing ministerial directives, these transactions should have been treated as high-risk.
Cryptomus was expected to:
- Verify the identities of senders and beneficiaries.
- Exercise due diligence.
- Maintain accurate transaction records.
- Report transactions to FINTRAC.
However, none of these obligations were fulfilled, indicating significant compliance failures at the exchange.
Additional Compliance Issues
In July 2024, the agency noted 1,518 transactions that met the $10,000 threshold for mandatory reporting of large virtual currency transfers. This too went unreported by Cryptomus.
FINTRAC criticized the exchange for having “incomplete and inadequate policies and procedures” that hindered proper monitoring and compliance. These failures represent violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Previous Actions Against Cryptomus
Prior to this recent penalty, Cryptomus faced additional consequences when the British Columbia Securities Commission temporarily banned the firm from trading securities and other market activities in May. In the 2024-25 period, FINTRAC issued a record 23 violation notices to businesses that failed to adhere to compliance regulations.
This unprecedented fine against Cryptomus underscores the increased scrutiny placed on cryptocurrency exchanges in Canada and highlights the critical importance of compliance in financial transactions.
