Catalyx Permanently Barred from Trading After Failing to Safeguard Client Assets
Catalyx, a Calgary-based cryptocurrency exchange that operated from 2019 to 2024, has been permanently barred from trading and purchasing securities by the Alberta Securities Commission (ASC). The ASC also fined Catalyx's CEO, Hyuk Jae Park, $90,000 for allegedly mismanaging millions of dollars in client crypto assets.
The exchange was shut down in December 2023 after a security breach resulted in the loss of millions of dollars in cryptocurrency assets. Under a cease-trade order from the ASC, Catalyx was prohibited from purchasing or trading securities until January 2025. However, shortly after the order was delivered, the company announced it would suspend all withdrawals from its platform.
The ASC claimed that Catalyx breached a set of conditions imposed to mitigate risk to clients' crypto portfolios when the exchange's court-appointed receiver found $14 million USD in client assets, but only $150,000 USD in material assets present in company accounts. This shortfall was attributed to unauthorized withdrawals and the use of crypto assets for purposes unrelated to Catalyx client activities.
Park also failed to notify the ASC of the assets breach until December 21, 2023, after discovering it in November that year. The ASC stated that the safeguarding of client assets and timely reporting of material breaches are core investor protection requirements.