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Canada's Regulatory Crackdown: $126 Million Fine for Crypto Firm Cryptomus

Canada's financial intelligence agency has levied a record $126 million fine against the cryptocurrency platform Cryptomus for multiple violations of anti-money laundering regulations.

The Vancouver-based firm, also known as Xeltox Enterprises Ltd., reportedly failed to submit over 1,000 suspicious transaction reports linked to serious offenses, including child exploitation and ransomware attacks.

According to a statement from the Financial Transactions and Reports Analysis Centre (FINTRAC), in July 2024 alone, more than 1,500 large-value crypto transactions went unreported.

This fine stands as FINTRAC's largest enforcement action to date, dwarfing previous penalties such as the $14 million fine against KuCoin last month.

In earlier actions, FINTRAC also sanctioned Binance’s Canadian affiliate with a C$6 million fine for similar compliance issues.

The agency stressed that the shortcomings within Canada's cryptocurrency sector severely hinder transparency and allow room for illicit activities.

Specifically, FINTRAC highlighted the firm’s failures to comply with regulations concerning Iranian-linked transactions, with over 7,500 such transfers remaining unverified and unreported.

An investigation revealed that Cryptomus's Vancouver address was merely a rented mailbox, raising concerns about its operational legitimacy and lack of a Canadian workforce.

Investigators noted irregular communications originating from Uzbekistan and Spain, indicating the potential for a more extensive compliance issue within the firm.

As regulatory scrutiny on the cryptocurrency sector intensifies, the case against Cryptomus serves as a cautionary tale for crypto platforms operating without adequate compliance measures.