“I lost my money in a cryptocurrency scam. My financial firm should have warned me.” Which case won?
Cryptocurrency trader falls victim to scam
During the 2021-2022 financial year, a cryptocurrency trader had a trading account with a financial company. He used the company’s platform to transfer bitcoin worth the equivalent of A$119,550 to an organisation called Company K.
The investor was under the illusion that he was transferring money to a legitimate organisation. However, this was not the case. The investor was in fact duped by an initial coin offering (ICO) scam that Company K was running.
Funds disappear and scammers stop responding
After the investor had transferred the funds, they became irretrievable and Company K stopped responding to his communications.
The cryptocurrency trader took the view that the financial firm where he held his trading account should have alerted him to the possibility that Company K was fraudulent and should have prevented the transfer of his bitcoin.
Consequently, the investor argued, the financial firm should compensate him for the $119,550 he had lost.
The financial firm disagreed, claiming it provided appropriate security recommendations to its clients.