They say to recover the funds now I need to put 1150 USD in the wallet to cover costs of the wire transfer and change to CAD to be put in my bank account.
Indeed its a scam.
Are you sure that you downloaded the actual atomic wallet or you downloaded a wallet from the file or link that were sent to you because it is impossible for them to get access of your funds with sending address and if the funds were send to you once then you should have the complete access to it and there is no need to do any further things here if it is legit.