- Xeltox/Cryptomus penalized C$177M for neglecting over 1,000 suspicious crypto transactions.
- Infringements included child exploitation, fraud, ransomware, and violations of sanctions.
- The company had previously been under scrutiny by the BC Securities Commission for unapproved exchange activities.
Canada’s Financial Transactions and Reports Analysis Centre (Fintrac) has levied the largest fine to date against Xeltox Enterprises Ltd., operating as Cryptomus, for alleged noncompliance with anti-money-laundering (AML) protocols.
The Vancouver-based cryptocurrency service provider was penalized C$177 million ($126 million) due to multiple charges regarding suspicious activity, as outlined in a statement released on Wednesday.
Extensive reporting deficiencies
Fintrac’s investigation revealed that Cryptomus failed to notify authorities about thousands of transactions within a single month, raising significant compliance alarms.
The agency pointed out that the firm did not submit reports for over 1,000 transactions in July 2024 that exhibited reasonable suspicions of being connected to money laundering, including proceeds associated with child sexual abuse material, fraud, ransomware payments, and sanctions evasion.
Furthermore, the regulator determined that Cryptomus neglected to report over 1,500 transactions where clients transferred virtual currency amounting to C$10,000 or more in a single transaction during the same timeframe.
These lapses instigated what Fintrac described as “unprecedented enforcement action,” reflecting the gravity of the potential financial crime threats involved.
Fintrac CEO Sarah Paquet stressed that the extent and character of the violations necessitated a firm response, citing the firm’s ongoing failures to fulfill AML responsibilities.
Previous regulatory oversight on Cryptomus
Cryptomus, previously known as Certa Payments Ltd., offers various cryptocurrency services, including trading, payments, wallets, and a peer-to-peer exchange.
The firm has previously attracted regulatory scrutiny in Canada.
In May, the BC Securities Commission accused Cryptomus of potentially functioning as an unrecognized exchange.
The provincial regulator issued a temporary order halting the firm from trading in securities or derivatives until June, highlighting ongoing concerns regarding its adherence to financial regulations.
Cryptomus’s operations in Canada and its background of enforcement actions reveal the challenges regulators face in monitoring cryptocurrency platforms, especially when transactions may involve illicit activities.
The recent fine signifies a major escalation in enforcement, signaling Canadian authorities’ commitment to ensuring crypto firms comply with strict AML regulations.
Consequences for the cryptocurrency industry
The unprecedented penalty against Xeltox and Cryptomus sends a definitative message to cryptocurrency enterprises operating in Canada: adherence to anti-money-laundering regulations is essential, and failures can lead to significant financial and operational repercussions.
The firm’s alleged shortcomings highlight the risks associated with platforms that process large volumes of unregulated digital transactions.
Fintrac’s ruling emphasizes that cryptocurrency platforms must prioritize regulatory compliance in their operations, rather than treating it as an afterthought, to avert similar penalties going forward.
The C$177 million fine marks the most substantial enforcement measure in Fintrac’s history and establishes a new standard for regulatory consequences within Canada’s evolving digital asset sector.
