It is a regrettable error which is expensive.
This is an error that raises eyebrows and questions the control mechanisms in the crypto industry as a whole.
This risky error is likely to push the regulators to tighten their supervision of the main players in the young industry, which is still trying to earn its letters of nobility and to allay the fears of the general public. It is not certain that with this error the evangelists of the crypto space have an additional argument in their fight for a mass adoption of the industry.
The error in question was the transfer to an Australian woman of A$10.47 million ($7.13 million) by crypto platform Crypto.com while the Melbourne resident was only expecting a refund of A$100 ($68), according to court documents.
7 Months to Realize the Mistake
The most worrying thing about this case is that Crypto.com, the cryptocurrency exchange platform of which actor Matt Damon is the ambassador, only realized the error almost seven months later.
Channel 7 was first to report this big mistake
These revelations are made because Crypto.com is trying to recover the money and has therefore gone to court.
“The plaintiffs made claims against a total of 8 defendants. The proceeding relates to a mistaken payment allegedly made to the first defendant, Thevamanogari Manivel,” court documents read. “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 into 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 lady’s accounts frozen in February, it turned out that she had already transferred much of the money to other people, including her sister Thilagavathy Gangadory, who are 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 that money. She purchased a 5-bedroom property in the suburbs of Melbourne for A$1.35 million on behalf of her sister Gangadory. The court ordered the sale of the property and that the money from that sale be given to Crypto.com.
“On 12 May 2021, the wrongful payment was made to Manivel,” the court said. Manivel retained those funds, disbursing $10,100,000.00 to the joint account. On 4 February 2022, Manivel withdrew funds from the joint account (…) for the purpose of buying and gifting the Craigieburn property to Gangadory.”
That transaction was completed prior to 21 February 2022.
“Gangadory is currently the registered proprietor 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], set out arrangements by which the first plaintiff was to sell the Craigieburn property, and awarded interest and costs in favor of the first plaintiff.”
The case returns to court in October.
Bad Timing for Crypto.com
“As the matter is before the courts, we are unable to comment,” a spokesperson for Crypto.com said in an emailed statement.
These revelations come at a delicate time for Crypto.com. There are questions about the firm’s financial situation after news that the platform has quietly cut hundreds of jobs in recent months.
According to Decrypt and The Verge, the platform has cut about 1,000 more jobs since June. Crypto.com confirmed to TheStreet that it has continued to downsize but did not give a figure. The company also insisted that its refusal to specify the extent of the cuts said nothing about its financial situation. Crypto.com claims to be in good financial health.
“We announced reductions in June and since that time we have optimized our workforce to align with current 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 moving forward,” the spokesperson added.