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No Reply, No Show:  Australian Crypto Exchange User Vanishes After Crypto Exchange Makes a $650,000 "Fat-Finger" Error

The $650K mistake: a costly error and its aftermath

Rhino Trading, an Australian cryptocurrency exchange, found itself embroiled in a daunting financial debacle. The exchange, through a grievous error, accidentally transferred $653,000 (995,000 Australian dollars) to a user, Kow Seng Chai, significantly overshooting the intended $65,300 (99,500 Australian dollars). This mistake, made in January, quickly spiraled into a situation fraught with evasion and legal complexities.

Upon realizing the error on February 4, Rhino Trading reached out to Chai, seeking the return of the funds. However, their efforts were met with silence; Chai neither responded to emails nor answered calls. Further complicating matters, court documents reveal Chai's alleged withdrawal of approximately $626,700 (956,000 AUD) from the exchange, exploiting the maximum daily withdrawal cap in a series of $100,000 transactions. 

This maneuver was facilitated by purchasing Tether and extracting the funds from the platform, a strategy that left the exchange in a precarious financial position.

As the situation escalated, Rhino Trading's legal pursuits led to a judicial intervention. The Supreme Court of Victoria, recognizing the "real risk of assets being disposed of," as stated by Justice Michael Osborne, enacted an asset freeze on February 9, followed by an injunction on February 21 to prevent Chai from leaving the country. 

Legal measures and previous incidents

This incident is not isolated within the cryptocurrency world. A similar case involving Crypto.com over two years prior echoes the perilous nature of digital transactions. In a staggering clerical error, Crypto.com transferred $6.86 million (10.47 million AUD) to a Melbourne couple, mistakenly entering an account number into the payment section of a spreadsheet, instead of the intended $100 refund. The recipients, believing the windfall to be prize money, embarked on a lavish spending spree.

While Kow Seng Chai remains elusive, facing legal action for the return of the funds, the Melbourne couple found themselves entangled in the consequences of their spending, with legal judgments reflecting the gravity of their actions. 

Through these examples, the cryptocurrency industry is reminded of the critical importance of operational precision and the complex interplay between technology, finance, and law.