Understanding Crypto.com's $7.2 Million Typo
KEY POINTS
- Crypto.com accidentally paid a customer over $7 million and didn't notice the mistake for seven months.
- The judge ordered the customer to repay the money as well as interest and court costs.
- If a crypto exchange makes an error in your favor, report the issue -- the money is not yours to keep.
After 15 months, Crypto.com is trying to get its money back.
Popular cryptocurrency exchange Crypto.com is taking legal action against a customer in Australia who kept the $7.2 million that was accidentally deposited into her account. It seems that a Crypto.com employee unintentionally typed an account number instead of an amount into the transfer field. As a result, Thevamanogari Manivel received around $7.2 million instead of the intended $68. Manivel kept the money and Crypto.com is trying to recover the funds plus interest and legal costs.
Anyone seen my millions?
The challenge for Crypto.com is that it was seven months before anyone noticed the mistake. The accidental payment was made in May 2021 and only uncovered in an internal audit at the end of that year. "Extraordinarily, the Plaintiffs allegedly did not realise this significant error until some seven months later, in late December 2021," commented the Supreme Court judge in the case.
Crypto.com then commenced legal proceedings and Manivel's account was frozen. But by that point, she had already spent some of the cash and transferred more to family members and other accounts. Plus, the court heard that Manivel had spent almost $1 million on a mansion for her sister.
Last week, the judge ordered the property be sold and the money returned to Crypto.com. According to The Washington Post, she will also need to pay legal costs, plus getting on for $20,000 in interest. So far, Crypto.com hasn't been able to get a response from Manivel and the judgment was made without the presence of her lawyers. The next court date is set for October.
Crypto.com hasn't responded to media questions as it's an ongoing case. After an extraordinary 2021 in which the crypto exchange bought the naming rights to the Staples Center and signed several other high profile sponsorship deals, 2022 has been a different story. The company has reduced staking rewards on its Cronos (CRO) token and laid off a number of staff.
What happens if a crypto exchange accidently sends you money?
It isn't the first time a crypto platform has accidently sent funds to customers. Both BlockFi and Compound were in the news last year for similar incidents. BlockFi mistakenly transferred Bitcoin (BTC) to some of its users in a promotion campaign. DeFi platform Compound sent over $90 million when a system upgrade went wrong.
If a bank makes a mistake in your favor, it can reverse the transaction and take the funds back. Life is not like Monopoly. If you try to spend that money or, say, move it to a high-interest savings account hoping to profit from it, you could face criminal charges. Contact your bank immediately and report the issue.
You might think that the world of crypto is different. After all, it's outside the traditional system and anything goes in crypto land, right? Wrong. It still isn't your money and you can't just keep it. The judgment in Australia shows that attempting to profit from these kinds of errors can land you in hot water, both financially and legally.
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