Crypto.com accidentally transfers $7.1 million to an Australian woman
It is a regrettable mistake that is expensive.
This is an error that raises eyebrows and calls into question the control mechanisms of the crypto industry as a whole.
This risky mistake is likely to push regulators to tighten oversight of the main players in the fledgling industry, which is still trying to earn its charters and allay public fears. It is not certain that the evangelists in the crypto space with this error have an additional argument in the fight for a mass adoption by the industry.
The mistake in question was the transfer to an Australian woman of A$10.47 million ($7.13 million) by crypto platform Crypto.com when the Melbourne resident only expected a refund of A$100 ($68), according to court documents.
7 months to realize the error
The most worrying thing about this case is that Crypto.com, the cryptocurrency exchange platform for which actor Matt Damon is an ambassador, only realized the mistake almost seven months later.
Channel 7 was the first to report this major error
These revelations are made because Crypto.com is trying to get the money back and has therefore gone to court.
“The plaintiffs filed claims against a total of 8 defendants. The proceedings relate to an erroneous payment allegedly made to the first defendant, Thevamanogari Manivel,” court documents state. “It was alleged that in May 2021, instead of refunding $100.00 as intended, $10,474,143.00 was erroneously transferred to Manivel after an account number was accidentally entered in the payment amount field by a representative of the second plaintiff.”
It continued: “Extraordinarily, the plaintiffs allegedly did not realize this significant error until some 7 months later, in late December 2021.”
When Crypto.com had the wife’s accounts frozen in February, it emerged that she had already transferred much of the money to other people, including her sister Thilagavathy Gangadory, who is now also being sued by the firm.
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Some of the money has already been spent
The problem is that Manivel has already spent some of the money. She bought a 5-bedroom property in the suburbs of Melbourne for $1.35 million on behalf of her sister Gangadory. The court ordered the sale of the property and that the money from the sale be given to Crypto.com.
“On May 12, 2021, the wrongful payment was made to Manivel,” the court said. Manivel kept these funds and paid $10,100,000.00 into the joint account. On 4 February 2022, Manivel withdrew funds from the joint account (…) for the purpose of purchasing and gifting the Craigieburn property to Gangadory.”
This transaction was completed before February 21, 2022.
“Gangadory is currently the registered owner of the Craigieburn property. Therefore, for the purposes of this application, it is established that the Craigieburn property was acquired with funds traceable to the wrongful payment,” the court concluded.
The court therefore declared that the property “was acquired by Gangadory on trust for the first plaintiff [Crypto.com]stipulated arrangements whereby the first plaintiff was to sell the Craigieburn property, and awarded interest and costs in favor of the first plaintiff.”
The case will come before the court in October.
Bad timing for Crypto.com
Crypto.com did not immediately return a request for comment.
These revelations come at a delicate time for Crypto.com. There are questions about the firm’s financial situation following the news that the platform has quietly cut hundreds of jobs in recent months.
According to Decrypt and The Verge, the platform has cut around 1,000 more jobs since June. Crypto.com confirmed to TheStreet that it has continued to reduce its size, but did not provide a number. The company also insisted that its refusal to specify the extent of the cuts did not say anything about its financial situation. Crypto.com claims to be in good financial health.
“We announced reductions in June, and since then we’ve been optimizing our workforce to adapt to today’s external economic headwinds,” a Crypto.com spokesperson told TheStreet last month.
“We have a strong balance sheet and will continue to invest in product, engineering and brand partnerships going forward,” the spokesperson added.
