Woman Repeatedly Warned by Canadian Exchange Not to Transfer Crypto, Gets Scammed Anyway

A British Columbia court has ruled that a crypto exchange was not at fault for a customer’s C$671,000 (US$480,000) loss to an online scam, despite repeated fraud warnings.

In a written judgment released Monday, Justice Lindsay LeBlanc of the BC Supreme Court dismissed the claim brought by Victoria resident Yan Li Xu against Calgary-based crypto exchange NDAX Canada, finding the platform had met its obligations after warning her four times that she was likely being defrauded.

While the Xu’s losses are “regrettable,” Judge LeBlanc “found no liability rests” with NDAX Canada, which she noted was registered as a money service business with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

The crypto exchange’s warnings to Xu “could not have been clearer,” Judge LeBlanc added.

Court facts found that Xu, working as an accountant in Victoria, opened an NDAX account on April 10, 2023, after being persuaded by an online acquaintance to invest in a scheme promising returns of up to 1% per day. 

To fund the investment, she remortgaged her home and borrowed money from a friend, then deposited C$671,000 into her account between April 11 and May 17, 2023, using the money to buy Ethereum.

On April 18 of the same year, an NDAX employee contacted Xu seeking further information on the withdrawal and warned that the “transaction exhibited risk factors” and would be escalated for review. 

The call, which was recorded, was later referenced in court. The judgment did not disclose details of said Ethereum transaction.

Following the call, Xu sent several emails to NDAX demanding to “proceed with the withdrawal without delay,” the judgment findings show. Xu’s tone later became increasingly insistent, and she warned that she might pursue legal action if the company did not comply.

When Xu tried to transfer the crypto to an external wallet, NDAX issued a series of escalating warnings.

The crypto exchange provided a written risk disclosure, a secondary confirmation notice, and two follow-up phone calls, with one of them from compliance officer Julia Baranovskaya explicitly warning that she was likely “being scammed.”

NDAX then processed her instructions, and the amounts in Ethereum were transferred to the scammer’s wallet and lost.

Xu’s case comes as Canada steps up enforcement around crypto-related compliance failures. 

Earlier this week, the country’s financial intelligence agency imposed a record C$176.9 million fine on a Vancouver-based crypto platform for violating anti-money laundering laws, citing thousands of unreported suspicious transactions tied to child exploitation, ransomware, and sanctions evasion.

To date, that penalty is the largest ever imposed on a crypto company registered in Canada.

Decrypt reached out to the British Columbia court and NDAX Canada for additional comment and possible details of the transaction. Efforts were made to reach out to Xu through her legal representatives.