A Canadian woman lost her life savings to a crypto scam after repeatedly ignoring warnings from her exchange. The victim, identified as Victoria resident Yan Li Xu, transferred 671,000 Canadian dollars (about $480,000 USD) worth of Ethereum through NDAX Canada in 2023.
This week, the British Columbia Supreme Court ruled that NDAX was not responsible for the loss because the exchange fulfilled its duties by warning Xu multiple times.
NDAX Warnings Could Not Have Been Clearer
Xu opened her NDAX account on April 10, 2023, after an online acquaintance convinced her to invest in a scheme promising returns of up to 1% per day.
To fund this “opportunity,” she remortgaged her home and borrowed from a friend. Over the next five weeks, she deposited C$671,000 into her NDAX account and used it to buy Ethereum.
Canadian woman sues crypto exchange for scam and loses | source: X
Soon after, Xu attempted to transfer the crypto to an external wallet. NDAX flagged the withdrawal as suspicious and contacted her on April 18 to verify the details. The exchange informed her that the transaction “showed risk factors” and would be escalated for review.
Despite being warned that she was likely being scammed, Xu demanded that NDAX release the funds immediately.
Judge Lindsay LeBlanc, who presided over the case, wrote in her ruling that NDAX’s warnings “could not have been clearer.” She added that while Xu’s losses were “regrettable,” the company performed its duties by warning her.
Four Warnings Before the Transfer
Court documents revealed that Xu ignored four separate warnings from NDAX staff before the transfer went through.
For the first warning, NDAX presented a “Crypto Risk Disclosure” notice on its platform. It explained that sending crypto to an untrusted wallet could result in permanent loss. It urged Xu not to proceed if anyone had remote access to her device or if the wallet was not trusted.
Xu clicked “accept” and confirmed she understood the risks.
For the second warning, the platform displayed a confirmation message that required her to acknowledge that crypto transfers are irreversible.
She again clicked to proceed.For the third warning, an NDAX employee called Xu directly, explaining that her transaction seemed fraudulent and that she was likely being scammed. The call was recorded.
Yet, Xu still insisted on completing the withdrawal and threatened legal action if NDAX delayed it.For the fourth warning, NDAX’s compliance officer, Julia Baranovskaya, called Xu to confirm she understood the risks. During the conversation, Xu said she was an experienced accountant who had traded stocks for over 20 years and was fully aware of what she was doing.
After confirming the request, NDAX processed the transaction as instructed.
Despite these warnings, Xu transferred her entire Ethereum balance to a wallet controlled by the scammers.
How the Crypto Scam Unfolded
Xu testified that she had met someone online who introduced her to the scam investment. At first, the individual asked for small amounts of money, which were later returned with profit to gain her trust.
Encouraged by these early “returns,” she was persuaded to invest a larger sum.
The scam promised daily profits of 1%, an offer that experts say is a clear red flag. Believing the opportunity was legitimate, Xu mortgaged her home. She borrowed from a friend and sent hundreds of thousands of dollars through NDAX to purchase Ethereum.
Once the crypto left her account, it was gone for good. Blockchain analysis later confirmed that the recipient wallet belonged to a third party unconnected to NDAX.
Source: https://coinpaper.com/11873/woman-gets-scammed-of-nearly-700k-eth-anyway-despite-repeated-bank-warnings
