Man vanishes after receiving about $500,000 in cryptocurrency account error

A Mildura man has vanished, after allegedly pocketing about half a million dollars when a cryptocurrency trading platform accidentally added an extra zero to his account.

Cryptocurrency trading platform Rhino Trading Pty Ltd, which operates the website OTCPro, applied to the Victorian Supreme Court for the man's assets to be frozen and for an order preventing him from leaving the country after he failed to respond to requests to return the money.

Cryptocurrency is a digital currency that allows people to make payments directly to each other through an online system.

Transactions are verified through a decentralised ledger known as a blockchain rather than by banks.

Court records show that on January 25,2024, OTCPro received a $99,500 deposit from 37-year-old Mildura man Kow Seng Chai through an account set up by his business Lotte Enterprise Pty Ltd.

When the company credited Mr Chai's trading account in the exchange, it mistakenly added a zero to the amount, crediting him with $995,000, not $99,500.

The company did not pick up the error until February 4.

Funds withdrawn before error picked up

By the time OTCPro picked up the error, Lotte Enterprise had used some of the funds to purchase a cryptocurrency called Tether and withdraw funds in multiple maximum daily instalments of US$100,000. 

Tether is known as a stablecoin. It is marketed as being less volatile than other cryptocurrencies because its value is pegged to the US dollar.

On the date the mistake was made, the Lotte Enterprise account had a balance of $1.36 million — $464,263 that Mr Chai had deposited, plus the extra $895,500 OTCPro credited by mistake.

Over the next 10 days, bank records show that Mr Chai withdrew about $956,000.

In evidence to the court, OTCPro claimed it suffered a total loss of $491,934.76, once the remaining account balance was subtracted from the amount mistakenly credited to the account.

Account holder uncontactable

Lotte Enterprise is registered to an address in Sydney, NSW, but Mr Chai used an address and utility bills for a property in Mildura, Victoria, to set up his crypto trading account.

Mr Chai is also the director of a company called New Everise Contractor Pty Ltd, which lists a second address in Mildura as Mr Chai's residential address.

Once it realised the mistake, OTCPro contacted Mr Chai by phone and email to request the mistakenly credited funds be returned.

When the company phoned the number linked to Mr Chai's account, the person who answered said that it was not the number of Kow Seng Chai, the company told the court.

Mr Chai did not respond to OTCPro's requests by email.

Assets frozen

On February 9, the Victorian Supreme Court issued a freezing order on Mr Chai's assets, and on February 21, issued an injunction preventing Mr Chai, who was born in Malaysia, from leaving Australia.

Mr Chai did not appear in court.

In making the orders, Justice Michael Osborne said there was a "real risk of assets being disposed of".

On searching Mr Chai's account records, OTCPro found Mr Chai had provided fraudulent bank statements as evidence of Lotte's business activities.

Justice Osborne said the "inauthenticity" of those documents was taken into account when making the orders.

When asked if it was investigating the matter, Victoria Police said it did not provide comment on individuals, as it was a breach of the privacy act.

OTCPro's director, Qi Tang, told the Victorian Supreme Court, Lotte's standard trading pattern was to deposit funds in Australian dollars into its account almost daily, with a total of $1.9 million deposited since the account was opened in December 2023.

The account would then purchase the Tether cryptocurrency and withdraw funds to a private blockchain wallet.

A search of the blockchain wallet by OTCPro after February 4 revealed only $149.33 in assets.

Unique insight into crypto trading

Melbourne University Lecturer in Cyber Security Computing and Information Systems Shaanan Cohney said the case offered a unique insight into cryptocurrency trading because it was rare for such cases to enter a courtroom.

"Normally the person who is sent the cryptocurrency funds disappears into the ether. And that's the end of the story," Dr Cohney said.

"In this instance, because it was sent to someone in the same country, they [OTCPro] were actually able to file a court case," he said.

Dr Cohney said questions remained about what other of Mr Chai's assets, if any, remained in Australia.

"Has [the money] been converted back to regular currency? he said.

"And if so, where are those dollars? Are they in an Australian bank account? Are they overseas?"