Cryptocurrency exchange Cryptomus fined record $177M by Fintrac

The $176,960,190 eclipses the previous record—roughly $20 million—for a fine imposed by Fintrac. That penalty was given to Peken Global Ltd, the operator of another cryptocurrency firm, KuCoin, in September.

“Given that numerous violations in this case were connected 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 the Cryptomus penalty.

Thousands of crypto transactions unreported

In a statement, the company said it is co-operating with the regulator and taking necessary measures in accordance with their decision.
The agency found 1,068 instances where Cryptomus did not submit reports for July 2024 transactions involving known darknet markets and virtual currency wallets with ties to the criminal activity Paquet described. Darknet markets are online and often anonymous platforms where illegal goods and services are sold. Virtual currencies also mask the identity of their holder, making both them and the darknet markets havens for criminal activity.

Fintrac said Cryptomus didn’t just violate money laundering laws when it failed to flag suspicious transactions, it also committed a violation when it failed to report 7,557 transactions originating from Iran between July 1 and Dec. 31, 2024. Because of ministerial directives linked to financial transactions associated with the Islamic Republic of Iran, Cryptomus was supposed to treat these transactions as high risk.

It was also required to verify the identity of the sender(s)/beneficiary(ies), exercise due diligence, maintain a record of the transactions, and report them to Fintrac, yet the agency said none of those obligations were fulfilled. Furthermore, Fintrac found 1,518 transactions in July 2024 that met the $10,000 threshold at which companies have to report a large transfer of virtual currency. Fintrac said these instances went unreported by Cryptomus, which also had “incomplete and inadequate policies and procedures” that created deficiencies in how the company handled ongoing monitoring and “know-your-client” obligations.

Case underscores rising scrutiny of crypto compliance

Adam Garetson, a partner at Gowling WLG, who leads its digital assets group, says the scale of the fine seems to be a result of both the seriousness of the allegations and how many times the rules were apparently violated. “The allegations of non-compliance were huge just from a volume perspective. They’re also allegations of evidence showing direct links to criminal activity, and flows of funds to sanctioned countries which were seemingly on a regular basis,” he said. “So these are some pretty egregious allegations in terms of non-compliant activity.”

He said the allegations are in sharp contrast to what he’s seeing generally in the Canadian crypto trading market, where operators are complying with anti-money laundering rules as well as Canadian securities regulations. The size of the fine against Cryptomus comes as both Canadian and international regulators are seeing more support for greater fines and sanctions to crack down on illicit finance, he said. 

Whether the regulator will be able to collect on the penalties is another question, since the company seems to have limited ties to Canada beyond its registration, with no employees apparently based in the country. Garetson said that there is at least rising co-operation among anti-money laundering regulators globally to increase the chances that recovery could occur. 

Paquet said in her statement that Fintrac is committed to working with both domestic partners and international allies to protect the safety of Canadians. 

Record year for Fintrac enforcement actions

Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, businesses ranging from financial institutions to real estate brokers and casinos must keep certain records, identify clients, maintain a compliance regime, and report financial transactions meeting specific criteria to Fintrac. The Wednesday fine is the latest reprimand Cryptomus has faced. The B.C. Securities Commission temporarily banned the firm in May from trading securities and other market activities.

In 2024-25, Fintrac issued 23 violation notices to business that didn’t comply. It was the largest number of notices issued in one year in its history and amounted to more than $25 million in penalties. Fintrac has imposed more than 150 penalties since it received the legislative authority to do so in 2008.