Key Takeaways
- Anonymoous crypto exchange TradeOgre has been offline since July.
- The Royal Canadian Mounted Police (RCMP) has confirmed being behind the shutdown.
- Canadian aithorities seized cryptocurrency worth over $56 million CAD ($40.5 million USD).
Canadian authorities have shut down TradeOgre, an anonymous crypto exchange mostly known for facilitating Bitcoin-Monero swaps.
This bust, which resulted in the largest cryptocurrency seizure in Canadian history, draws parallels with the case of Tornado Cash, which has been targeted by law enforcement agencies around the world.
Canadian Police Take Down TradeOgre
On Thursday, Sept. 18, the Royal Canadian Mounted Police (RCMP), Canada’s federal law enforcement agency, announced that they had shut down TradeOgre for not registering with the appropriate authorities and failing to identify its clients.
“Investigators have reason to believe that the majority of funds transacted on TradeOgre came from criminal sources,” RCMP said in a statement.
“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,” the release added, calling this “a common tactic used by criminal organizations that launder money.”
TradeOgre initially went offline on July 30, sparking fears among users that it had been hacked or that its operators had walked away with their deposits.
Little is known about the exchange’s owners, and the RCMP’s announcement didn’t mention any arrests, although it did confirm the seizure of cryptocurrency worth over $56 million CAD ($40.5 million USD).
Legal experts have noted that the law does provide for a route for innocent users to recover their funds. However, “it is likely to be a long and difficult process,” one privacy advocate observed.
Parallels With Tornado Cash
With Canadian police touting TradeOgre’s alleged criminal user base as the main rationale for shutting the platform down, the case draws parallels with another embattled private exchange, Tornado Cash.
The two platforms deployed different exchange designs. Tornado Cash is a decentralized protocol, while TradeOgre operated a centralized order book system.
Nevertheless, they are connected by their lack of KYC (know-your-customer) systems, letting users trade crypto anonymously.
In the U.S., sanctions against Tornado Cash were eventually lifted following an appeals court ruling which determined that immutable smart contracts are not “property” as traditionally understood in law.
Tornado Cash’s permissionless design helped strike down money laundering charges against founder Roman Storm in August.
In contrast, Storm’s co-founder Alexey Pertsev was convicted of money laundering in the Netherlands, where he was sentenced to 64 64-month prison sentence. (Although he was released in February to focus on his appeal.)
Anonymous Crypto Trading and Money Laundering
The cases of TradeOgre and Tornado Cash both highlight the perils of offering anonymous crypto services, which can violate anti-money laundering laws.
In a recent interview with CCN, Cake Wallet CEO Vikrant Sharma warned that legal actions against anonymous platforms created a culture of fear among developers.
Because Cake Wallet doesn’t custody assets or profit from the anonymous crypto swaps it facilitates, Sharm hopes it won’t be targeted by law enforcement. Nevertheless, “you’re always looking over your shoulder,” he observed.
The TradeOgre case is interesting because Canada sits somewhere between the U.S. and the EU in balancing rights and freedoms with anti-money laundering enforcement.
For now, there is no indication that legal action is being taken against the platform’s owners. But that might just be because no one knows who they are.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
