B.C.-incorporated crypto firm appeals record $176M FINTRAC penalty

A cryptocurrency firm incorporated in British Columbia is appealing a $176-million penalty issued by Canada’s anti-money-laundering agency last month.

Xeltox Enterprises Ltd. said in an appeal filed in Federal Court that the Fin­an­cial Trans­ac­tions and Reports Ana­lysis Centre of Canada’s (FINTRAC) penalties for violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act were based on “errors of law.”

The company said FINTRAC found the company in violation for failing to report suspicious transactions, including more than 7,500 with connections to Iran, over which Xeltox claims it had “no knowledge or control.”

The appeal says Xeltox licenses its software from a Panama-based company that owns the Crytomus platform, and FINTRAC “misapprehended” them as the same entity.

Xeltox Enterprises says it’s registered with FINTRAC as a money services business under the act, and the alleged violations were committed by “foreign licensees” of the Cryptomus platform with no connection to Canada.

FINTRAC director and CEO Sarah Paquet said in a statement last month that “numerous violations” in the case involved child sexual abuse material, fraud, ransomware payments and sanctions evasion, leading to the record penalty issued against the firm.

Tara Deschamps, The Canadian Press

Tara Deschamps is a reporter with The Canadian Press, a national news agency headquartered in Toronto and founded in 1917.