Canada’s federal police service has announced the largest digital asset seizure in the country’s history, after over CAD 56 million (US$40 million) worth of digital assets were recovered from exchange TradeOgre. The action also marks the first time that a digital asset exchange has been “dismantled” by Canadian law enforcement.
On September 18, the Royal Canadian Mounted Police (RCMP) released a statement explaining that the seizure was the culmination of a year-long investigation by the Money Laundering Investigative Team (MLIT), which opened the file on TradeOgre in June 2024 following a tip from the European Union Agency for Law Enforcement Cooperation (Europol), the EU’s law enforcement agency.
“The investigation found that the platform contravened Canadian laws and regulations,” said the RCMP. “Specifically, it failed to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a money services business and did not identify its clients.”
TradeOgre is a centralized digital asset exchange established in 2018 by an unknown founder and registered in the United States. The exchange sold itself as a platform offering anonymous trading with no Know Your Customer (KYC) requirements.
Under Canadian law, digital asset exchanges operating in the country are considered money services businesses (MSBs) and required to register with FINTRAC, something authorities said TradeOgre had failed to do. In their announcement, the Canadian Police also said investigators had reason to believe that the majority of funds transacted on TradeOgre came from criminal sources.
“The main attraction of this type of platform, which doesn’t require users to identify themselves to make an account, is that it hides the source of funds,” said the RCMP. “This is a common tactic used by criminal organizations that launder money.”
The agency added that the investigation is ongoing, and that transaction data obtained from the platform would be analyzed, with potential charges to follow, although they would first need to identify the appropriate person/s to charge.
For its part, TradeOgre has yet to officially comment on the investigation and the website currently displays a banner from the RCMP stating that “this site and its cryptoassets have been seized by the RCMP.”
While those behind the platform remain quiet for the time being, the seizure was heavily criticized by others in the space, including Reuben Yap, co-founder of privacy-focused cryptocurrency Firo, who suggested it will likely be difficult for TradeOgre’s users to reclaim their funds.
“While the law does provide for a route for innocent users to try and claim their funds, it is likely to be a long and difficult process with lots of ways to make a mistake,” said Yip, in a September 18 post on X.
Noting the difficulties faced in a similar case of seized assets, he added that “the evidentiary burden was immense, requiring claimants to provide extensive on-chain and off-chain documentation to prove both their ownership of specific funds and the legitimate source of those funds. This is further complicated if your funds were privacy coins.”
The TradeOgre case serves as a warning to platforms operating in Canada that KYC and anti-money laundering (AML) obligations are not optional, and failure to comply with local standards could lead to the shuttering of service and seizure of assets.
Back to the top ↑
Canada’s crypto rules
Much like the United Kingdom and the United States, Canada still lacks a digital asset-specific regulatory framework, with each of the country’s provinces and territories having its own rules and securities regulator.
As of June 2020, entities engaged in digital assets are considered MSBs and must register with FINTRAC and comply with the relevant KYC and AML obligations. In addition, if a certain digital asset is deemed a security, then securities regulations may also apply to the service providers, and they may need to obtain a license from the provincial security authority.
The Canadian Securities Administrators (CSA) is the umbrella organization and national standard setting body for the country’s securities regulators, and said in a 2018 Staff Notice that “every offering is unique and must be assessed on its own characteristics.” However, the chief criteria noted was whether the asset constitutes “an investment contract.”
The CSA has also confirmed that digital asset exchanges, or any platforms that offer trade execution and custody services, need to be registered with a securities regulator as they deal with ‘crypto contracts.’
Once a platform is deemed to violate Canada’s rules and laws, the question becomes what to do with any seized and forfeited assets.
In 2023, the Government of Canada, the RCMP and Shared Services Canada (SSC)—responsible for government information technology services—jointly announced that they were seeking submissions and proposals for the development of a digital asset solution to facilitate the seizure and storage of cryptocurrency and non-fungible tokens (NFTs) from multiple public blockchains, to be known as the “Digital asset repository.”
“The RCMP requires the ability to safely and securely store digital assets that have been seized and retained, until their eventual disposition at the conclusion of any legal proceedings,” said the announcement. “The development of a centralized repository solution would allow police officers to seize these assets in a user-friendly manner, while also offering significant security to prevent the theft of said assets during their storage.”
The closing date for applicants with proposed solutions was September 2023. It has yet to be revealed which, if any, solutions were settled on and approved
Back to the top ↑
Watch | Certihash Sentinel Node: Improving cybersecurity with blockchain
title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen=””>
Source: https://coingeek.com/40m-crypto-seized-as-canada-shuts-tradeogre-exchange/