Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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Canadian cryptocurrency exchanges ordered to cease dealings with convoy-linked accounts
City News Vancouver | Martin MacMahon | Feb 16, 2022
Cryptocurrency exchanges in Canada are being ordered by the RCMP to stop dealing with accounts suspected to have links to the anti-mandate convoy protest.
A letter from police orders digital coin exchanges not to deal with accounts with suspected links to that movement, which has caused disruptions across the country, most notably at several border crossings and in Ottawa.
The letter provides a list of accounts, according to an executive in that sector who has shared the details of that police instruction under condition of anonymity, which CityNews has granted.
This week, Prime Minister Justin Trudeau invoked the Emergencies Act for the first time in Canadian history.
In a statement, the Finance Ministry said the order “extends the scope of Canada’s anti-money laundering and anti-terrorist financing rules to cover crowdfunding platforms and the payment processors they use.”
“This change covers all forms of transactions, including digital assets such as cryptocurrencies.”
As police attempt to choke the convoy cash, chief executive Michael Vogel with Vancouver-based crypto platform Coinstream says it’s a reminder that using digital coins does not completely shield your identity or your dealings.
See: PM Trudeau Invokes Emergencies Act Catching Protester Firms including Crypto in Crossfire
At the time of his interview with CityNews, police had not contacted Vogel with that letter received by other companies in the cryptocurrency sector.
“Cryptocurrency exchanges in Canada fall under FINTRAC [the Financial Transactions and Reports Analysis Centre of Canada], so every customer does have to be onboarded with some form of verification, proof of address, the kind of standard documents that you’d have to have when opening a bank account,” Vogel told CityNews in an interview. “Crypto customers aren’t anonymous in Canada, and if there’s an issue that comes up, there is a mechanism for law enforcement to reach out to crypto companies.”
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CryptoAdventure | Andrew Throuvalas | Feb 17, 2022
Canadian Authorities Blacklist 34 Crypto Addresses Involved With Trucker Convoy
Canada’s government is expanding its crackdown on donations to protestors objecting to vaccine mandates in Ottawa. In new efforts, the Royal Canadian Mounted Police (RCMP) have ordered crypto exchanges to not facilitate transactions with blockchain addresses linked to the movement.
As reported by The Counter Signal on Wednesday, FINTRAC companies in Canada have been ordered to cease transactions with 34 specific crypto addresses. These include 1 Monero, Litecoin, and Cardano address, two Ethereum addresses, and 29 Bitcoin addresses.
See: An Analysis of Bitcoin’s Use in Illicit Finance
Each address can be viewed in the RCMP’s recent statement to crypto exchanges, as revealed by a Bitcoin news desk yesterday. The order is to address “illegal acts” falling under the “Emergencies Act” invoked by Prime Minister Justin Trudeau days ago. It gives the government power to freeze bank accounts suspected of involvement with the trucker convoy – without a court order.
The 9th address listed was the one used in the “Bitcoin For Truckers” campaign. The fundraiser collected over $900,000 in Bitcoin dedicated to the truckers and has since dispersed it to various addresses as part of its distribution process.
Bitcoin’s Real World Test
Bitcoin was specifically designed to bypass financial censorship from third-party intermediaries using peer-to-peer transactions. As such, even if exchanges blacklist a set of addresses, this does nothing to prevent users from sending Bitcoin to and from one another.
See: Right to anonymous payments
Things become a bit more complicated when attempting to convert Bitcoin into dollars – which usually requires a regulated exchange. In that case, the truckers may resort to peer-to-peer cash exchanges or Bitcoin ATMs to facilitate fiat conversion. They may also use mixing services like CoinJoin to erase their money trail on the blockchain and preserve their privacy.
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CTV News | Ian Bickis, Canadian Press | Feb 15, 2022
New rules going after blockade financing an overreach, critics say
Kim Manchester, managing director of financial intelligence training company ManchesterCF, says flagging accounts in this way could financially ruin those targeted and make it difficult for them to get any financial services in the future.
"It's very tough on people when the activities of the Canadian government can lead to the financial meltdown of individuals associated with the protests who are guilty by association, by directive, and not by judicial process."
He noted that the legislative framework around the laws was crafted to target terrorists and transnational organized crime, so when individuals are flagged under the system, banks and other financial institutions may be reluctant to deal with related accounts flagged as high risk.
See: Alex Vronces: Follow the money, but also look in the mirror
"Any financial institution who becomes aware of, or is informed to them by government, may be incredibly leery about dealing with that individual."
He said that invoking the Emergency Act is entirely out of proportion to the threats posed by the protesters and should be reserved for severe emergencies or when national security is compromised.
Vanessa Iafolla, a financial crime consultant, said the use of the measure was a "serious derivation from the normal democratic processes that we generally expect to see in Canadian society" and that the government could have gone about changing the rules without undertaking emergency powers.
She said that while accounts won't be shut down overnight, banks will have the option to eliminate from the market anyone involved in the protests.
"Clients will come under scrutiny and it is possible that many of them will be at risk of losing their access to all but the most basic banking services."
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