Catalyx crashes: insider suspected in exchange heist

abdelaziz Fathi

Canadian cryptocurrency exchange Catalyx has suspended all trading, deposits, and withdrawals due to a security breach that resulted in the loss of some customer funds.

CatalX CTX Ltd., the Calgary-based company operating Catalyx, announced the suspension and the launch of an investigation into the incident, which they suspect may involve an employee. The exact amount of funds lost has not been disclosed.

Following the breach, the Alberta Securities Commission issued a cease trade order against Catalyx and its co-founder Jae Ho Lee. To assist with the probe, Catalyx has engaged Deloitte LLP, a global financial auditing firm, to provide forensic and investigative services.

“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 exchange said in an official statement.

As of now, the Catalyx website displays a notice about the platform experiencing “technical difficulties,” and promises to update users when regular functions are restored. Founded in 2018 by Jae Ho Lee, the Calgary-based exchange is registered with Canada’s national financial intelligence agency, FINTRAC.

In May 2021, amid a broader bull market, Catalyx reported a monthly trading volume of $28 million, a significant increase at the time. However, current data on the exchange’s reserves or trading volume is not readily available on crypto data aggregators.

The recent move comes as Canada’s financial regulator is rolling out a co-ordinated oversight regime for cryptocurrency activities. Now, all crypto trading platforms seeking registration are obliged to sign undertakings to comply with investor protections.

The new rules will also make it more difficult for retail investors to trade cryptocurrencies using leveraged bets.

The Canadian Securities Administrators (CSA) plans to strengthen its oversight of cryptocurrency exchanges operating in the country. As part of a basket of new registration requirements, crypto applicants will have to agree to tighter rules, including a ban on margin and leverage trading.

Additionally, the proposal prevents crypto providers from accepting payments via credit cards and requires them to keep customer assets segregated from their own operational funds.

These measures also include suggestions that providers should be forced to hold all Canadian clients’ assets “with an appropriate custodian and segregate these assets from the platform’s proprietary business.”

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