A British Columbia Supreme Court has ruled that cryptocurrency exchange NDAX Canada is not responsible for a customer’s loss of C$671,000 (US$480,000) after she was defrauded in an online crypto investment scam.
Justice Lindsay LeBlanc dismissed the claim filed by Yan Li Xu, a Victoria resident and accountant, who argued that NDAX failed to protect her from a fraudulent investment scheme. The judge found that the exchange had fulfilled its legal duty by issuing multiple warnings about possible fraud before Xu transferred her funds to scammers.
NDAX Issued Multiple Fraud Warnings
Court documents reveal that Xu opened her NDAX account in April 2023 after being convinced by an online acquaintance to invest in what was described as a lucrative cryptocurrency opportunity. To participate, she remortgaged her home and borrowed money, ultimately depositing C$671,000 into her NDAX account to purchase Ethereum (ETH).
NDAX Canada, a platform registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), flagged the activity as suspicious and warned Xu four separate times about potential fraud. The company also emphasized that crypto transactions are irreversible once sent outside the platform.
Despite these warnings, Xu insisted on withdrawing her Ethereum and transferring it to an external wallet that later turned out to belong to scammers.
Court Emphasizes Personal Responsibility in Crypto Investing
In her decision, Justice LeBlanc concluded that NDAX had met all reasonable obligations to protect its customer. The court acknowledged Xu’s loss as “deeply unfortunate” but determined that the exchange could not be held liable since it had acted responsibly and provided clear fraud alerts.
The ruling underscores a key principle for Canadian crypto investors: individual responsibility remains crucial in digital asset transactions. Once cryptocurrency leaves an exchange and enters a private wallet, the funds cannot be recovered if sent to a scammer.
This case serves as a reminder that, even with regulated platforms like NDAX, investors must stay vigilant and skeptical of “high-return” crypto investment offers, particularly those initiated through online acquaintances or social media.
