Cryptocurrency donations to convoy protest can still be tracked, committee hears

Donors to the anti-vaccine mandate convoy protest who made their donations using cryptocurrency can still be monitored by authorities, a cryptocurrency expert told a parliamentary committee Monday.

The finance committee is looking at the government's decision to invoke the Emergency Act after the protest paralyzed downtown Ottawa and blocked a number of vital border crossings.

Brian Mosoff, chief executive officer of Ether Capital, said Canadian crypocurrency platforms can continue to watch for the cryptocurrency wallets that were identified in connection with the protest — even if the donor chose to use a self-hosted wallet rather than a company with a centralized cryptocurrency platform.

"The platforms who are regulated, or becoming regulated in Canada, working with regulators on appropriate frameworks, will monitor the activity," Mosoff told MPs.

"So whether an individual is using a self-hosted wallet and making a donation to an identified address that was not able to be frozen at that time, those platforms now have a red flag up, looking for interaction with those specific assets. And so they are still able to monitor that behaviour, those activities, and move in should those funds ever interact directly with their platform."

Mosoff's testimony comes as questions continue to swirl about the money donated to the protest. While crowdfunding campaigns attracted millions of dollars in donations — including donations from outside Canada — a cryptocurrency fundraiser raised more than a million dollars.

Some crypto transactions blocked

While the movement of cryptocurrencies between wallets can be tracked, it can be very difficult to track who owns the wallet.

When the government invoked the Emergency Act to break up the convoy occupation and the RCMP moved to freeze financial accounts related to the protest, they included a number of cryptocurrency wallets on the list.

Two Canadian companies involved in cryptocurrency told MPs that they did block some transactions for a small number of their clients.

Blair Wiley, chief legal officer for Wealthsimple, said his company had one wealth management client whose registered account was frozen for about three days until the RCMP cleared them to unfreeze it. Wiley said the client was not notified the account was frozen.

He said his company focused on identifying transactions that were sending cryptocurrency to fundraisers for the convoy protest.

"No cryptocurrency was frozen. We did, however, respond to the list of bitcoin addresses that had been associated with fundraisers and did block some transactions that were directed to go to those addresses," said Wiley, adding he would have to look up how much was blocked.

Dustin Walper of Newton Crypto Ltd, said the company went through its client list but none of their clients matched the names provided by the RCMP.

"We did block a small number of transactions after we received that information but I can't tell you how much," said Walper. "It wasn't a particularly large amount."

Crypto platforms abroad not covered by Canadian law

The witnesses said millions of Canadians have investments in cryptocurrency. But while some have invested through Canadian cryptocurrency companies which report to organizations like FINTRAC — Canada's money laundering and terrorist financing watchdog — others use cryptocurrency platforms located in other jurisdictions which are not obliged to respect Canadian law or court orders.

The cryptocurrency experts said they received a lists of cryptocurrency wallets and individuals but they were not given instructions about what to do with the information once the Emergency Act invocation was lifted. Wiley said he wasn't sure that retroactive guidance would be useful but said that if the Act is ever invoked again, government and law enforcement should improve their communication with cryptocurrency companies.

Walper said the industry would like to have better communication with law enforcement, particularly when it comes to things like fighting fraud.

The witnesses said they also would like the Canadian government to develop a regulatory framework for their industry. They said it would help the industry develop in Canada and could help ease some of the problems companies that specialize in cryptocurrency have been experiencing with finding banking and audit services.

While they said cryptocurrency has the potential to grow in Canada and create jobs, they also warned that the cryptocurrency industry is very mobile and will seek out the most attractive jurisdictions.

In other testimony, RoseAnne Archibald, national chief of the Assembly of First Nations, expressed concerns about the prospect of the Emergency Act being used in future in relation to Indigenous protests to protect land and water.

She said she is also concerned about information the RCMP provided to financial institutions being retained and having a future impact on the relationship between Indigenous protesters and financial institutions.

"We should not be on any lists but I am concerned, yes, that those lists do exist," she said.