In major ruling, Malaysian wins RM697,000 from crypto firm Luno for unauthorized Bitcoin purchases | Malaysian mail

KUALA LUMPUR, Nov 1 — A Malaysian man was yesterday awarded nearly RM700,000 after successfully suing cryptocurrency investment firm Luno Malaysia Sdn Bhd for negligence, following the allegedly unauthorized use of more than one half a million ringgit into his Luno account in 2021 to buy digital. Bitcoin currency.

Lawyer Ong Yu Jian said Malaysian mail that his client Yew See Tak claimed that Luno failed to protect the cryptocurrencies in his Luno account, further claiming that this resulted in a loss of his cryptocurrencies worth almost RM600,000 .

According to Ong, Sessions Court Judge Sazlina Safie, in a ruling delivered online yesterday, ruled in favor of Yew and found Luno negligent.

“The court ordered, among other things, the defendant to compensate the plaintiff in the sum of RM597,920.05 as well as an additional RM100,000.00 as exemplary damages,” Ong said. Malaysian mail yesterday regarding the decision.

Luno will not have to immediately pay Yew the court-ordered sum, totaling more than RM697,000, as the company successfully obtained a temporary stay of the effect of the sessions court’s ruling yesterday.

Ong said Malaysian mail that the Sessions Court granted Luno a 14-day interim stay, pending Luno’s appeal to the High Court against the Sessions Court’s decision yesterday.

Ong said this means his client can demand the awarded sum from Luno after the 14-day provisional stay ends.

In this case, Yew was also represented by lawyers Joshua Ho and Nurul Hanani Azamuddin, while Luno was represented by lawyers Muhammad Faisal Moideen, Maximilian Tai and Clarence Tang.

Commenting on the significance of yesterday’s decision by the Sessions Court, Ong said: “This decision sends a clear message that cryptocurrency platforms can be held liable if their customers’ accounts are scammed or compromised. a hack.

“This is a very encouraging development in cryptocurrency legislation. If not wrong, this is the first such decision in Malaysia against a cryptocurrency platform recognized by the Securities Commission of Malaysia. Hopefully this will lead to cryptocurrency platforms being much safer to use in Malaysia in the public eye,” he said Malaysian mail.

From Malaysian mailChecks from regulator Securities Commission Malaysia (SC) website of latest listing dated 17 August 2022, Luno Malaysia Sdn Bhd is one of the five recognized market operators that the SC has registered and authorized to operate digital asset exchanges in Malaysia.

What is this matter about?

In his suit filed through a summons at the Petaling Jaya Court on August 25, 2021 against Luno Malaysia Sdn Bhd, Yew sought several court orders, including a declaration from the court that he was not involved in the transactions of March 6. 2021 on his Luno account.

He had also asked the court for compensation in the form of special damages amounting to RM597,920.05, general damages to be assessed, aggravated damages and exemplary damages.

Based on his statement, Yew said he was a registered customer and Luno account holder. The Luno account has a Luno wallet where money can be kept online and can be used to buy, store, sell, send and receive cryptocurrencies.

According to Yew, he had discovered on March 6, 2021 that RM566,570.70 from his Luno account was used in three transactions to purchase 2.730096 Bitcoin (BTC), describing them as illegal transactions carried out within a short period of time.

Yew said that these newly purchased 2.730096 BTC and the existing 0.15106083 BTC in his account were then transferred to an unknown account via other illegal transactions. Yew said he had never transferred funds to the unknown account before.

Based on the exchange rate where one Bitcoin was valued at RM207,527.77 at that time, the total 2.88115683 BTC transferred from Yew’s Luno account was worth RM597,920.05 at that time.

Yew said he never authorized the illegal transactions in which new Bitcoins were purchased and the Bitcoins were transferred from his account, saying these were done without his knowledge and approval.

Yew said he filed a police report on the illegal transactions to enable police to investigate, adding that he also suspected that it was possible that these illegal transactions were linked to illegal purposes such as money laundering. silver.

Yew said the illegal transactions were suspicious given the short time frame in which they occurred and when cross-referenced with the activity history on his Luno account, and that the illegal transactions involved all or almost all of the funds in his account.

Yew claimed that Luno was negligent for various alleged reasons, such as alleged failure to stop illegal transactions despite exceeding the daily transaction limit; failure to check with him whether he had authorized these transactions; failure to freeze the account despite suspicious activity and to investigate and take immediate action to mitigate its losses; and failure to detect the possibility of money laundering and failure to report transactions to authorities, including the SC.

Yew said he made a report to Luno customer service on March 7, 2021, but said they believed there was nothing suspicious about the Luno account.

In its defense statement, Luno Malaysia denied Yew’s allegations and presented its own timeline of the events that occurred.

Luno said its customer service department received Yew’s report on the evening of March 6, 2021 (instead of the March 7, 2021 date indicated by Yew) claiming unauthorized access to his Luno wallet and that all funds in his account Luno had been withdrawn, and that Yew had requested that the withdrawal be suspended and that Luno recover approximately RM566,000.

Luno said he told Yew on March 8, 2021 that he had locked his Luno account for security reasons, adding that he also responded on March 9, 2021 to Yew saying that the latter’s Luno wallet was accessible via your own email and password. and no unusual connections were detected; and that all transactions were made via the Luno website and app from Yew’s mobile phone and that each transaction was authorized via a text message sent to his mobile number.

Among other exchanges between the two, Luno said Yew claimed on March 9, 2021 an unauthorized withdrawal of all his funds from his Luno wallet and said his cellphone was with him when the transactions took place, and that the The pattern of the transactions was questionable and should have triggered an anti-money laundering alert.

Luno said he told Yew on March 10, 2021 that there was no indication that his Luno wallet had been compromised and that a Bitcoin transaction could not be reversed once made due to the nature of blockchain technology.

In its defense, Luno stated that it did not have access to Yew’s Luno wallet and that Yew had full access and exclusive control over his Luno account, adding that no other third party had access to authorize these transactions .

Luno argued that it is Yew’s obligation to protect his own gadget and password, and that it is not Luno’s obligation to do so.

Among other things, Luno said he only had a duty of care to ensure that all transactions made on Yew’s Luno account were duly authorized, and claimed that each of the transactions – which Yew considered illegal – had been authorized by Yew in accordance with Luno security features.

Citing the standard terms of service that Yew had to agree to in order to register his Luno account, Luno said these state that the company has no duty of care for any losses or transactions made that resulted in losses by Yew.

Luno also said that the account that received the BTC from Yew’s account was not reported by independent third-party blockchain monitoring service provider Chainalysis Inc as being linked to illegal activities, explaining that Luno does not does not suspend or block transactions if they are not flagged as such and if they were. duly authorized.

Luno also said that there was no daily transaction limit as Yew claimed during these alleged illegal transactions, also claiming that she had not detected any suspicious activities on the latter’s Luno account.

In response, Yew, in another court document, insisted that Luno was the custodian and trustee of his money and BTC, saying Luno still had a duty of care and fiduciary duty to block all suspicious transactions and fraudulent and to request clarification before authorizing any transaction.

Yew said the option to authorize a transaction carries the risk of unauthorized access by those who have a device capable of receiving the SMS prompt via the customer’s registered number, and asserted that it does not had not received or had any knowledge of an SMS requesting authorization from Luno. for these allegedly illegal transactions.

Denying authorizing the alleged illegal transactions, Yew claimed he only discovered the transactions after feeling suspicious when his access to one of his online accounts was blocked with the message “SMS exceeding daily limit” and only after verifying their accounts, including the Luno Account.

Yew said his Luno account was not accessible through his regular iPhone gadget (which he used to trade at any time) but through an unknown gadget not belonging to him, and claimed that Luno had not been attentive to the unknown gadget accessing his Luno. account and empty his Luno wallet.

Among other things, Yew insisted that there was a daily transaction limit that the alleged illegal transactions had exceeded and that authorizing the transactions would not overturn those daily transaction limits.

Ong confirmed that there was no hearing and that the matter was decided following the filing of written submissions by Yew and Luno.


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