Crypto exchange Cryptomus fined record $177M by Canada’s financial crimes watchdog
A cryptocurrency exchange has been fined nearly $177 million for violations including failing to flag more than 1,000 transactions that had suspected links to criminal activity – the largest fine ever imposed by Canada’s financial intelligence agency.
The Financial Transactions and Reports Analysis Center of Canada (FINTRAC) announced the fine for Zeltox Enterprises Ltd. on Wednesday. The BC-incorporated business operates as Cryptomus and was previously known as Serta Payments Limited.
The $176,960,190 fine surpasses the previous record for fines imposed by FINTRAC – nearly $20 million. The fine was handed down in September to Payken Global Ltd., the operator of another cryptocurrency firm, KuCoin.
Director and CEO Sarah Paquette said in a statement about the Cryptomus penalty, “Given that multiple violations in this case involved trafficking of child sexual abuse materials, fraud, ransomware payments, and sanctions evasion, FINTRAC was forced to take this unprecedented enforcement action.”
The agency found 1,068 instances where Cryptomus did not submit reports for transactions dating back to July 2024, including known darknet markets and virtual currency wallets that were linked to the criminal activity described by Paquette.
Darknet marketplaces are online and often anonymous platforms where illegal goods and services are sold. Virtual currencies also hide the identity of their holders, making both them and darknet markets havens for criminal activity.
FINTRAC said Cryptomus not only violated money laundering laws when it failed to flag suspicious transactions, but it also violated when it failed to report 7,557 transactions originating from Iran between July 1 and December 31, 2024.
Due to ministerial directives relating to financial transactions involving the Islamic Republic of Iran, Cryptomus should have treated these transactions as high risk. It was also required to verify the identity of the remitter(s)/beneficiary(s), conduct due diligence, maintain records of transactions, and report them to FINTRAC, yet the agency said none of these obligations were met.
Company banned from BC securities trading in May
Additionally, FINTRAC found 1,518 transactions in July 2024 that met the $10,000 threshold at which companies are required to report large transfers of virtual currency.
FINTRAC said these incidents were not reported by Cryptomus, which also had “incomplete and inadequate policies and procedures”, leading to deficiencies in the company’s handling of its ongoing monitoring and “know your customer” obligations.
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 customers, maintain a compliance regime and report financial transactions that meet specific criteria to FINTRAC.
Wednesday’s fine is the latest rebuke suffered by Cryptomus. The BC Securities Commission temporarily banned the firm from trading securities and other market activities in May.
In 2024-25, FINTRAC issued 23 violation notices to businesses that did not comply. This was the largest number of notices issued in one year in its history and the fine amounted to more than $25 million.
FINTRAC has imposed more than 150 penalties since receiving the legislative authority to do so in 2008.
