An Age Old Challenge Through New Age Methods?

The Singapore High Court has ruled that a crypto asset holder has a legally enforceable property right. Justice Philip Jeyaretnam held that "a crypto asset is a thing in action, enforceable via court orders and also capable of being subject to a trust". This is a landmark case and is the first time a common law court has made such a ruling. It highlights Singapore's pragmatic approach in applying established principles to emerging situations like cryptocurrency.

As I delved into the article and the court's judgement, it became interesting to me for other reasons. This case serves as a valuable reminder and illustration of age old fraud red flags and typologies operating through a new age payment method. In essence, details were changed in excel files tracking monthly cash and cryptocurrency payments resulting in over 4.2 million USDT of ByBit's cryptocurrency funds being transferred to four addresses linked to one of ByBit's employees, Ms Ho.

Here are some of my observations based on the events which led up to ByBit Fintech Ltd taking action against Ho Kai Xin and others:

1. Typical red flags were clearly evident including a change in Ms Ho's spending habits and making purchases beyond her financial means. In this case the purchase of a luxury penthouse condominium, a car purchase and Louis Vuitton designer goods. The explanation for being able to afford such purchases in a short period of time was attributed to monies earned from cryptocurrency trading.
2. The opportunity was also clearly present with Ms Ho singularly responsible for updating the relevant files which were maintained in excel and the only person with access. A lack of controls and segregation of duties was therefore clearly an issue.
3. The explanations as to how the errors had occurred were vague and explained away as being "anomalous transactions" or over payments and attributed to mistakes or technical errors.
4. And then there is cousin "Jason"...but for that you need to read the article and judgment.

It's also interesting to consider the discovery process of certain evidence: 

1. The service provider responsible for the wallet associated with one of the addresses followed an account registration procedure that involved verifying the wallet owner's identity. This involved collecting KYC information, such as a copy of Ms. Ho's identity card and a self-portrait.
2. Transaction records established connections between additional addresses and the aforementioned address. This provided compelling evidence indicating that Ms. Ho probably possesses and manages the wallets connected to these other addresses.
   
   

This goes to highlight how, through the implementation of strong KYC programmes and utilising information available on the blockchain, such matters can be uncovered.

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