ASC alleges breach of Alberta securities laws by crypto asset trading platform CatalX CTS Ltd. and its CEO and CFO
The Notice of Hearing alleges that Lee perpetrated a fraud on Catalyx clients and that Catalyx failed to comply with a written undertaking it had given the ASC to permit it to continue operating in Canada while its application for registration as an authorized crypto asset trading platform (CTP) was being reviewed by the Commission.
At the time of the alleged misconduct, CTPs operating in Canada were required to sign a pre-registration undertaking in order to continue operations while their application for registration was under review. As part of the undertaking, CTPs were required to comply with terms and conditions to address investor protection concerns. More information about the regulation of CTPs is available on the Canadian Securities Administrators website.
According to the Notice of Hearing:
Beginning in February 2019, Lee improperly withdrew at least $14,030,000 CAD worth of clients' crypto assets from the Catalyx CTP, and transferred them to accounts he controlled at other CTPs. Lee subsequently returned some crypto assets to the Catalyx CTP, leaving it with a substantial shortfall. Lee also misappropriated clients' fiat currency deposits for unauthorized purposes.
By November 24, 2023, Park was aware that Lee perpetrated a fraud on clients of Catalyx, but Catalyx failed to inform the ASC of this material breach of the written undertaking until December 21, 2023.
In further breach of the written undertaking, Catalyx failed to establish, maintain and apply policies and procedures to manage and mitigate the risk of an employee misappropriating clients' fiat currency and crypto assets that were meant to be held in trust for clients.
These are allegations and have not been proven in a hearing.
An appearance to set a date for a hearing will be held on September 15, 2025 in the ASC Hearing Room, located on the 5th floor, 250 – 5 Street S.W., Calgary, Alberta.
A copy of the Notice of Hearing can be found on the ASC website.
The ASC gratefully acknowledges the assistance of the BC Securities Commission, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and the Financial Market Authority Liechtenstein.
The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.
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