“Are you just saying you can forfeit everyone’s balances?” — the fallout from Canada’s first dismantled exchange, TradeOgre

Did Canada’s first dismantled crypto exchange mark progress in crackdowns, or did it prove that user fallout remains the most ignored consequence of enforcement?

Canada pulls the plug on TradeOgre in record crypto seizure

On Sep. 18, the Royal Canadian Mounted Police seized more than CAD 56 million (about $41 million) in digital assets and shut down TradeOgre, marking the largest crypto seizure in Canada and the first full dismantling of a crypto exchange in the country.

The case had started more than a year earlier, in June 2024, when Europol tipped off Canadian officials about suspicious activity linked to the platform.

From there, the RCMP’s Eastern Region Money Laundering Investigative Team led an inquiry into TradeOgre’s failure to register with Canada’s Financial Transactions and Reports Analysis Centre and its lack of user identity checks.

Investigators said these gaps allowed users to open accounts anonymously, creating conditions that drew in criminal groups moving illicit funds.

Hints of trouble appeared months before the seizure was confirmed. In late July 2025, traders reported being unable to withdraw funds and flagged the disappearance of communication from the exchange.

Authorities now say the platform’s assets have been secured and operations halted, with transaction records under review. Any next steps, including possible criminal charges, will depend on what the data reveals.

User outrage over lost funds

Reaction to the RCMP’s shutdown of TradeOgre was fast and heated across crypto circles.

Many argued that innocent users were being swept up in an action that treated them as guilty by association and gave little room for recourse.

Taylor Monahan, security lead at MetaMask, was among the most outspoken critics. She wrote on X, “Sorry to contradict your ‘beliefs’ but last time I checked my friends and I are not criminals.”

She later added, “Very much looking forward to seeing the evidence, and for you to provide recourse to ALL innocent parties you stole money from without notification and without due process.”

Reuben Yap, co-founder of the privacy-focused project Firo, voiced similar concerns. He asked, “Are you just saying you can forfeit everyone’s balances because we didn’t KYC? That’s theft from many innocent users.”

He warned that even if users tried to recover their funds, the process would likely be long and complicated, with hurdles that could block claims.

According to Yap, the burden would fall on users to show detailed on-chain and off-chain proof of their holdings, and even then repayments would reflect the value at the time of seizure rather than any later gains.

Questions about transparency added to the criticism. One user wrote on Reddit, “Guys, what the hell is happening at TradeOgre? They’ve been radio silent and offline for like 24 hours now, I had around 25k USDT … is it an exit scam?”

Such reports deepened concerns about how little communication came from either the exchange or the authorities before the seizure was made public..

A decade of rules, but gaps remain

Canada’s regulatory approach to crypto has evolved over more than a decade, but it remains a fragile mix of federal oversight, provincial rules, and enforcement that has often lagged behind market realities.

The first milestone came in 2014 when Parliament amended anti-money laundering laws through Division 19 of an omnibus bill.

The amendments brought virtual currency dealers under the definition of “money services businesses,” making them subject to registration with FINTRAC as well as obligations to monitor transactions and report suspicious activity.

Despite this framework, several failures exposed weaknesses in Canadian oversight. The collapse of QuadrigaCX in 2019 became one of the most cited examples.

Once a leading exchange, QuadrigaCX left more than 115,000 customers with losses when it declared insolvency, owing CAD 215.7 million in liabilities against only about CAD 28 million in assets.

Investigators later found that the company lacked robust internal controls, had poor security practices, and offered little transparency in how it handled user funds. The fallout became a turning point in discussions on how exchanges should be supervised.

In the years that followed, regulators increased pressure on both domestic and foreign operators. The Ontario Securities Commission brought an action against Bybit, arguing it was conducting business in Ontario without the required registration.

That case ended with a settlement in which Bybit paid CAD 2.5 million in penalties and left the Canadian market, a move widely seen as evidence of the OSC’s intent to narrow the space for non-compliant exchanges.

Even with these measures, enforcement gaps persisted. Some exchanges continued to allow account creation with little or no identity verification, and registration requirements were often enforced only after problems became visible.

Disputes over whether platforms should fall under securities law, MSB rules, or both also left room for operators to exploit uncertainty across jurisdictions.

In the months leading up to the TradeOgre investigation, regulators had begun closing some of these gaps with more staff notices, enforcement actions, and warnings that crypto assets could fall under securities law.

Yet the fact that the TradeOgre case began only after Europol provided a tip in June 2024 showed that Canadian authorities had not flagged the platform on their own.

Canada joins global clampdown

The decision to dismantle TradeOgre places Canada within a global pattern of tightening oversight of crypto platforms.

In the U.S., the Securities and Exchange Commission has steadily increased enforcement pressure. In 2024 alone, the agency filed 33 cases tied to digital asset market participants, many involving fraud or unregistered securities offerings.

The financial impact was considerable, with monetary penalties for the year totaling around $5 billion. While some of these cases targeted token projects and initial coin offerings, several directly implicated trading platforms accused of facilitating unlawful activity without proper oversight.

Regulatory tightening has also advanced in Europe under the Markets in Crypto-Assets framework. In mid-2025, countries including France, Italy, and Austria called for expanded authority for the European Securities and Markets Authority to supervise crypto firms.

Other jurisdictions that once took a more permissive stance are moving in the same direction. In Australia, the financial intelligence agency AUSTRAC ordered Binance’s local arm to bring in an external auditor in 2025, citing gaps in compliance resources and governance.

The case lays bare a hard tension. Users face the sudden loss of assets without due process, while authorities gain the power to dismantle entire platforms in the name of compliance. 

After years of piecemeal regulation, Canada still needed Europol to sound the alarm, leaving questions about whether enforcement here is catching crime or simply covering its own failures.