A Costly Mistake

In May 2021, Crypto.com made a colossal error that would soon become a legal quagmire. An employee mistakenly sent $6.86 million USD, equivalent to 10.47 million AUD, to Australian couple Thevamanogari Manivel and Jatinder Singh.

This error occurred instead of a mere $100 refund. The mistake was due to an employee allegedly entering an account number into the payment section of an Excel spreadsheet.

The Initial Oversight

Crypto.com didn't immediately catch the error. The exchange eventually detected that the bank account did not match the exchange account.

Instead of refunding the 100 AUD that the couple tried to deposit, the exchange mistakenly sent 10.5 million AUD to Manivel's bank account. By the time the exchange found the error in its December 2021 internal audit, Singh had already spent most of the money.

He had bought multiple homes and even gifted a friend $1 million AUD, claiming he believed he had won 'an online raffle.'

Prosecutors Advocate Jail Time

In a court hearing on August 2, 2023, Australian prosecutor Campbell Thomson argued that the sheer amount of money involved made it 'out of range' to be considered a mere crime of opportunity. He emphasized that a jail sentence was necessary for Singh.

'It may not be that you send him to jail for very long at all after taking into account his presentence detention,' he stated. Singh's lawyer, Martin Kozlowski, countered that Singh didn't fully grasp the seriousness of the situation. 'Nobody knows how they would respond if faced by the same situation,' he added.

'It must be taken into account the funds here came from a multinational that didn't even know the funds were gone until an audit sometime later.' - Martin Kozlowski

Concerns of a Flight Risk

Earlier this year, in March 2023, prosecutors argued that Singh was a flight risk due to the financial gains. Only $4.9 million had been recovered, with part of it already sent abroad.

This added another layer of complexity to the ongoing legal proceedings. Singh is scheduled to be sentenced next month.

In September 2023, his partner, Manivel, received a roughly seven-month prison sentence (time already served) and was placed on an 18-month community corrections order. She had pleaded guilty to recklessly handling the proceeds of crime.

Rising Crypto Crime

This case is not an isolated incident. It aligns with a reported increase in crypto crime in Australia. On July 15, the Australian Transaction Reports and Analysis Centre (AUSTRAC) Money Laundering National Risk Assessment highlighted an uptick in criminal use of crypto.

AUSTRAC anticipated a spike in criminal use due to the anonymity and faster transaction speeds offered by cryptocurrencies.

Related: Darknet market crypto crimes on the rise in 2023, $1.7B revenue -- Chainalysis

The Crypto.com error case serves as a stark reminder of the vulnerabilities in digital financial systems and the legal challenges that can ensue.