A costly clerical error has led to a tangled web of alleged fraud and theft in the world of cryptocurrency trading.
Kow Seng Chai, a 37-year-old Mildura man, stands accused of illegally withdrawing close to $1 million dollars that was accidentally deposited into his OTCPro trading account.
TLDR
- Mildura man Kow Seng Chai received an erroneous $995,000 deposit instead of the intended $99,500 into his cryptocurrency trading account from platform OTCPro.
- Chai allegedly withdrew around $956,000 from his account before OTCPro realized the mistake 10 days later. The company claims a $491,934 loss.
- Chai became uncontactable after multiple attempts from OTCPro to retrieve the erroneously deposited funds. His provided documentation also appears fraudulent.
- The Victorian Supreme Court has frozen Chai’s assets and barred him from leaving Australia while the case proceeds.
- Another recent case in Melbourne saw a man sentenced over misappropriated Crypto.com funds, indicating these erroneous deposits are not unheard of.
On January 25th, 2024, Chai made a standard $99,500 AUD deposit into his OTCPro account via his registered business Lotte Enterprise PTY LTD. However, due to an accounting mishap, the trading platform credited him with 10 times that amount – $995,000 AUD. This sum was left untouched for 10 days before OTCPro noticed the mistake.
By February 4th, damage was already done; Chai had quickly converted his unexpected windfall into the stablecoin Tether, withdrawing the maximum daily amount of $100,000 USD over multiple days for a total haul of around $956,000 AUD.
With the discrepancy uncovered, OTCPro was left $491,934 out of pocket. Their attempts to directly contact Chai by phone and email were met with dead ends – literally in the case of his provided phone number.
Red flags were also raised around some documents Chai had earlier submitted to verify his account and business dealings. OTCPro backtracked and declared them likely fraudulent.
With repossession attempts floundering and funds fading into blockchain anonymity, the spurned company turned to legal intervention. Citing a “real risk” of asset disposal, the Victorian Supreme Court concurred. Chai’s holdings have been frozen and he now faces travel restrictions that prevent him skipping the country back to his native Malaysia.
The elaborate theft-by-technicality has analysts like Melbourne University’s Shaanan Cohney intrigued; such incidents rarely end up in court due to the pseudonymous nature of cryptocurrency transactions across borders.
But Chai’s local address provided OTCPro tangible legal standing. It has also opened up speculation around his other potential Australian assets and whether the siphoned money has already been laundered into different forms or offshore holdings.
For Cohney, it represents an opportunity to glimpse behind the blockchain curtain at the behaviors driving crypto participation. Chai’s trading pattern prior to the windfall saw multiple near-daily fiat currency deposits that were quickly swapped out to Tether – hinting at possible money laundering motives beyond profit-taking.
As Chai’s alleged escape to Malaysia has been foiled, OTCPro will be hoping he didn’t pull a similar disappearing act with their unaccounted hundreds of thousands in erroneous gains.
And they’ll also be double-checking their digit entries so other clients avoid similar but legitimate trading fortunes. For cryptocurrency critics, the case may serve to confirm suspicions around the space being a hotbed for unlawful activity and unclear motives.
