In the absence of concrete regulation, the first crypto fraud case has been brought before the Federal Court in Australia.

A French national, Alexandre Raffin, brought proceedings against a Gold Coast company, Modern Assets Australia, for a breach of duty of care during a botched deal with a mystery seller. Modern Assets Australia acts as a cryptocurrency advisory and research firm, to which Alexandre engaged to close a deal with the South Korean cryptocurrency Klaytn. Alexandre himself runs a brokerage firm in Paris where he pools investor money to purchase cryptocurrency. However, during his engagement with Modern Assets Australia, the Australian company failed to dispose of the cryptocurrency to Alexandre and instead put Alexandre in contact with the supplier. To Alexandre’s demise, the supplier then deleted their account and fled with the cash. The Klaytn cryptocurrency continued to perform a 30x rise since then robbing Alexandre and his investors of close to $3.7M.

Cryptocurrency remains a generally unregulated sector. There tends to be no form of insurance and lack of oversight, especially when great sums of money are involved. Scams and shills proliferate this area to pry on naïve investors. In this situation, Alexandre not only failed to capitalise on his profits but actually paid out his investors with money from his own pocket. With little recourse in hunting down the scammers, Alexandre pointed the finger at Modern Assets Australia for their lapse in due diligence. Alexandre is seeking close to $800,000 in damages for his loss. Depending on the outcome of the court, this could become a landmark decision in the Australian cryptocurrency domain.

In a similar vein, Apple has recently come under fire for listing an illegitimate app on their App Store. Due to the dangerous nature of the cryptocurrency market, smart investors tend to keep their coins on cold storage or offline wallets. This puts the keys of the cryptocurrency directly in the user. One of these cold storage wallets is Trezor, with an accompanying Trezor app to connect your wallet to your computer or smartphone. A scammer created a fake Trezor app and listed it on the App Store to emulate the official Trezor app. As such, the scammer was able to gain access to people’s secret keys and steal close to $600,000 worth of Bitcoin through a bait and switch method. The central concern with Apple is its failure to conduct due diligence to assess whether this was a legitimate app. Even Trezor themselves have mentioned that they have been notifying Apple that fake versions of their app have been popping up to lure in crypto holders. For cryptocurrency to continue its wider adoption, it will be necessary to put in effective legislative and regulatory measures to mitigate against such abuses.