Cryptocurrency exchange Cryptomus fined record $177 million by Fintrac

The $176,960,190 fine broke Fintrac’s previous fine of approximately $20 million. In September this year, Peken Global Ltd, the operator of another cryptocurrency company, KuCoin, received this penalty.

“Given the numerous violations in this case related to trafficking in child sexual abuse material, fraud, ransomware payments and sanctions evasion, Fintrac was compelled to take this unprecedented enforcement action,” director and CEO Sarah Paquet said in a statement about Cryptomus’ penalties.

Thousands of cryptocurrency transactions went unreported

The company said in a statement that it is cooperating with regulators and taking necessary steps based on their decisions.
The agency found 1,068 instances in which Cryptomus failed to file reports of transactions in July 2024 involving known darknet markets and virtual currency wallets that were linked to the criminal activity described by Paquet. Darknet markets are online and often anonymous platforms that sell illegal goods and services. Virtual currencies also mask the identity of their holders, making them and darknet markets a haven for criminal activity.

Fintrac said Cryptomus violated money laundering laws not only by failing to flag suspicious transactions, but also by failing to report 7,557 transactions originating in Iran between July 1 and December 31, 2024. Due to ministerial directives related to financial transactions related to the Islamic Republic of Iran, Cryptomus should consider these transactions to be high risk.

It was also required to verify the identity of the sender/beneficiary, conduct due diligence, keep transaction records and report to Fintrac, but the agency said none of these obligations were met. Additionally, Fintrac found 1,518 transactions in July 2024 that reached the $10,000 threshold that companies must report large virtual currency transfers. Fintrac said Cryptomus failed to report the instances and that the company had “incomplete and inadequate policies and procedures” that resulted in deficiencies in the company’s handling of ongoing monitoring and “know your customer” obligations.

Case highlights growing scrutiny of cryptocurrency compliance

Adam Garetson, a partner and head of digital assets at Gowling WLG, said the size of the fine appeared to be determined by the seriousness of the allegations and the number of apparent breaches of the rules. “The allegations of breaches are substantial from a quantitative perspective alone. The allegations also show evidence of a direct link to criminal activity, and funds appear to be frequently flowing to sanctioned countries,” he said. “So these are some pretty egregious allegations in terms of non-compliance activity.”

He said the allegations were in stark contrast to what he has seen generally in the Canadian cryptocurrency trading market, where operators comply with anti-money laundering rules as well as Canadian securities regulations. He said the size of the fine against Cryptomus comes as both Canadian and international regulators are seeing growing support for greater fines and sanctions to combat illicit finance.

Whether regulators will be able to collect the fine is another question, as the company appears to have limited ties to Canada beyond its registration and apparently has no employees based in the country. Garretson said there was at least greater cooperation between global anti-money laundering regulators to increase the chances of recovery.

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Paquette said in a statement that Fintrac is committed to working with domestic partners and international allies to keep Canadians safe.

Record year for Fintrac enforcement actions

Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, businesses ranging from financial institutions to estate agents and casinos must keep certain records, identify customers, maintain compliance systems and report financial transactions that meet certain criteria to Fintrac. Wednesday’s fine is the latest reprimand Cryptomus has faced. The BC Securities Commission temporarily banned the company from securities trading and other market activities in May.

In 2024-25, Fintrac issued 23 breach notices to businesses that failed to comply. It was the largest number of notices issued in one year in the company’s history, and the fine amounted to more than $25 million. Since receiving legislative authority in 2008, Fintrac has imposed more than 150 penalties.

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