A British Columbia-incorporated cryptocurrency exchange, operating under the name Cryptomus, is pushing back against a staggering $177 million penalty handed down by Canada’s financial crimes regulator. The fine, issued by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), marks the largest in the agency’s history and stems from alleged breaches of anti-money laundering and terrorist financing laws.
In a recent Federal Court appeal, Xeltox Enterprises Ltd.—the entity behind Cryptomus—argues that FINTRAC’s decision was flawed due to legal errors. The company contends it had no awareness or oversight of the problematic transactions, which included over 7,500 dealings linked to Iran. Xeltox emphasizes that it merely licenses software from a Panama-based firm that controls the Cryptomus platform, and FINTRAC wrongly conflated the two as a single operation.
According to Xeltox, it’s properly registered as a money services business with FINTRAC, and any infractions were carried out by foreign licensees unrelated to its Canadian activities. The appeal highlights that the platform’s structure separates it from direct involvement in these issues.
On the other side, FINTRAC’s CEO Sarah Paquet described the violations as severe, involving connections to child sexual exploitation, fraud, ransomware, and efforts to bypass sanctions. The agency identified 1,068 unreported transactions in July 2024 alone, tied to darknet markets—anonymous online spaces for illegal trades—and wallets associated with criminal enterprises. Virtual currencies’ anonymity further exacerbates these risks, turning them into tools for illicit activities.
FINTRAC also cited Cryptomus for failing to report 7,557 Iran-originating transactions from July to December 2024, violating a Ministerial Directive. Additional lapses included inadequate compliance policies, poor risk assessments, unreported changes to business information, and neglecting to flag over 1,500 large virtual currency transactions (each $10,000 or more) in July 2024.
This case underscores growing concerns in Canada’s booming crypto sector, where weak controls can expose the system to money laundering, terrorist funding, and sanctions dodging. In the 2024-25 fiscal year, FINTRAC issued a record 23 violation notices, totaling over $25 million in fines—the highest annual count since gaining penalty powers in 2008. Overall, the agency has levied more than 150 penalties across various industries.
FINTRAC’s role as Canada’s financial intelligence unit is crucial: it oversees compliance for sectors like casinos, banks, money services, and real estate, requiring them to verify clients, maintain records, and report suspicious or large transactions. These reports fuel investigations into money laundering, terrorism, sanctions evasion, and national security threats.
A Word from OCryptoCanada.ca: Prioritize Safety with Regulated Exchanges
At OCryptoCanada.ca, we believe this incident highlights the critical need for crypto users to stick with regulated and verified platforms in Canada. Unregulated or poorly managed exchanges can expose you to unnecessary risks, including legal troubles and financial losses. To help you navigate safely, check out our in-depth guide on the Best Crypto Exchanges in Canada, where we break down top options that prioritize compliance, security, and user protection. By choosing established, FINTRAC-registered providers, you can trade with confidence and avoid the pitfalls seen in cases like this.
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