Canadian Crypto Exchange Catalyx Freezes Trading, Deposits, and Withdrawals After Security Breach

CatalX CTX Ltd., the company behind crypto exchange Catalyx, suspended all customer trading, deposits, and withdrawals after a “security breach.” The exchange suspects the breach may have involved one of its employees. 

Canadian cryptocurrency exchange Catalyx froze withdrawals and halted all trading activity after it experienced a “security breach.” Catalyx suspects one of its employees may have been involved in the incident. 

Undisclosed Losses

The company behind Catalyx, CatalX, announced via a press release that the exchange suffered a “security breach” and suspects one of its employees may be complicit. The company did not reveal how many crypto assets were lost during the breach.

“Management suspects that this security breach, which may involve an employee, has resulted in the loss of a portion of the crypto assets held by the Company on behalf of its clients,” CatalX said in its statement. 

The company explained it is currently investigating the breach and enlisted Deloitte LLP to provide forensic and investigative services. 

The company assured its customers that it would keep them updated.  

“Due to the Loss, all crypto and fiat currency withdrawals from the Platform and all trading activities on the Platform have been temporarily suspended. The Company will provide an update to its customers upon the conclusion of Deloitte LLP’s investigation. Further updates will be provided on this matter when available,” the company said.

Canadian Regulators Order Catalyx to Cease Trading Crypto Contracts

The freeze on Catalyxs’ services came after Canadian regulators ordered the exchange on December 21 to stop all trading of crypto contracts. Regulators have opened an investigation into the company, and CEO Jae Ho Lee agreed to the 15-day freeze order made by the Alberta Securities Commission.

The order “expires at 10:30 p.m. (MST) on January 5, 2024, unless extended by the Commission.” 

Unfavourable Conditions See Multiple Exchanges Exit Canada

Several crypto exchanges have left the Canadian market, citing unfavourable regulatory conditions. In May, Binance exited the country after Canada reportedly passed rules related to stablecoins and investor limits for crypto operations. Binance said Canada’s regulations made it unviable for it to continue its operations in the country.

Soon after Binance announced its withdrawal, ByBit said it would also exit and shutter all its products and services offered in Canada. The exchange also cited unfavourable regulatory conditions.  

Leverage Trading Ban

In December 2022, the Canadian Securities Administration (CSA) announced it would prohibit crypto firms from offering leverage trading to its customers. The CSA explained that leverage trading should not be allowed as it is deemed “high-risk, speculative investments.”

Canadian authorities appear determined to protect investors against perceived digital asset volatility.

In addition to its ban on leverage trading, the CSA is also sceptical of stablecoins and said they “may constitute securities, and/or derivatives.” The CSA’s statement reminds registered or pre-registered undertaking (PRU) platforms that they are forbidden from allowing Canadians to have exposure to such assets. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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