A Mildura man has disappeared, after allegedly pocketing around half a million dollars when a cryptocurrency trading platform accidentally added an extra zero to his account.
Cryptocurrency trading platform Rhino Trading Pty Ltd, which operates the OTCPro website, asked the Victorian Supreme Court for a freeze on the man's assets and an order preventing him from leaving the country after he failed to respond to requests for money back.
Cryptocurrency is a digital currency that allows people to make payments directly to each other through an online system.
Court records show that on January 25, In 2024, OTCPro received a $99,500 deposit from 37-year-old Mildura man Kow Seng Chai through an account created by his company Lotte Enterprise Pty Ltd.
When the company credited Mr. Chai's trading account on the exchange, it mistakenly added a zero to the amount, crediting him $995,000, not $99,500.
The company did not detect the error until February 4.
Funds withdrawn before the error was detected
When OTCPro detected the error, Lotte Enterprise had used some of the funds to purchase a cryptocurrency called Tether and withdraw funds in multiple maximum daily installments of US$100,000.
Tether is known as a stablecoin. It is marketed as less volatile than other cryptocurrencies because its value is pegged to the US dollar.
On the date the error was made, the Lotte Enterprise account had a balance of $1.36 million: $464,263 that Chai had deposited, plus the additional $895,500 from OTCPro credited in error.
Over the next 10 days, bank records show Chai withdrew about $956,000.
As evidence in court, OTCPro claimed that it suffered a total loss of $491,934.76, once the remaining account balance was subtracted from the amount mistakenly credited to the account.
Account holder not contactable
Lotte Enterprise is registered at an address in Sydney, New South Wales, but Chai used an address and utility bills from a property in Mildura, Victoria, to set up his cryptocurrency trading account.
Mr Chai is also a director of a company called New Everise Contractor Pty Ltd, which lists a second address in Mildura as Mr Chai's residential address.
Once the error was realized, OTCPro contacted Mr. Chai by phone and email to request the return of the funds credited in error.
When the company called the number linked to Mr Chai's account, the person who answered said it was not Kow Seng Chai's number, the company told the court.
Chai did not respond to OTCPro's email requests.
Frozen assets
On February 9, the Supreme Court of Victoria issued an order freezing Mr Chai's assets and on February 21 issued an injunction preventing Mr Chai, who was born in Malaysia, from leaving Australia.
Mr. Chai did not appear in court.
Making the orders, Judge Michael Osborne said there was a "real risk of assets being disposed of".
By searching Mr. Chai's account records, OTCPro discovered that Mr. Chai had provided fraudulent bank statements as evidence of Lotte's business activities.
Judge Osborne said the "lack of authenticity" of those documents was taken into account when making the orders.
When asked if it was investigating the matter, Victoria Police said it did not comment on individuals as it was a breach of privacy law.
OTCPro director Qi Tang told the Victorian Supreme Court that Lotte's standard trading pattern was to deposit Australian dollar funds into its account almost daily, with a total of $1.9 million deposited since it was opened. the account in December 2023.
The account would then purchase the Tether cryptocurrency and withdraw funds to a private blockchain wallet.
A search of the blockchain wallet conducted by OTCPro after February 4 revealed only $149.33 in assets.
Unique information about cryptocurrency trading
Shaanan Cohney, professor of computer science and cybersecurity information systems at the University of Melbourne, said the case offered a unique insight into cryptocurrency trading because it was rare for such cases to reach court.
"Normally, the person to whom the cryptocurrency funds are sent disappears into the ether. And that's the end of the story," Dr. Cohney said.
"In this case, because it was sent to someone in the same country, [OTCPro] We were actually able to bring a case to court," he said.
Dr Cohney said questions remained about what other assets of Mr Chai, if any, remained in Australia.
"Has [the money] Has it been converted back to normal currency? he said.
"And if so, where are those dollars? Are they in an Australian bank account? Are they overseas?"
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