A Melbourne couple is facing criminal charges after spending millions of dollars that were accidentally deposited into their bank account by a cryptocurrency exchange. Thevamanogari Manivel and her partner Jatinder Singh went on a massive spending spree that included luxury homes and cars before the exchange discovered the error, according to court records. Their attempts to claim the windfall as a prize have landed them in legal trouble.
The saga began in May 2021 when Manivel transferred 100 Australian dollars to Singh's account on the Crypto.com exchange. But instead of just moving her funds, Crypto.com erroneously sent 10.5 million Australian dollars - over $7 million USD at the time - to Manivel's bank account.
The mistake was not noticed until months later, when the company conducted an audit in December 2021. Crypto.com swiftly filed a lawsuit to recover the funds, but by that time, the couple had already gone on an extravagant shopping spree.
Spending Spree With Wrongly Sent Millions
Before the exchange realized its blunder, Manivel and Singh had purchased four properties, including a five-bedroom, $1.35 million home in Craigieburn, according to court records. They also bought several luxury vehicles, jewelry, and artwork, in addition to transferring approximately $4 million to an account in Malaysia.
The Craigieburn property was among the assets a judge ordered to be sold, with proceeds returned to Crypto.com. But recovery efforts have been complicated by the couple's lavish expenditures and overseas money transfers.
Related: Crypto.com confirms 400 user accounts compromised in recent hack
In October 2022, Manivel and Singh appeared in court to contest the lawsuit. They claimed they believed the millions were a prize they had won from Crypto.com.
Singh said he recalled getting a notification about a competition from the exchange, though no evidence was presented to back this up. Crypto.com's compliance officer, Michi Chan Fores, adamantly denied the company had run any such contest or sent prize notifications to users.
Theft Charges and October Plea Hearing
Rejecting the "prize" explanation, prosecutors charged Manivel with theft in early 2023. She pleaded guilty this month to a reduced charge of recklessly dealing with proceeds of crime.
Manivel received an 18-month community corrections order with six months of unpaid work. She had already served 209 days in custody.
Singh now faces an October 23 plea hearing on a theft charge which could land him in prison. Crypto.com is also continuing civil proceedings to claw back as much money as possible.
An Avoidable Crypto Compliance Failure
While Manivel and Singh clearly took advantage of the mistaken windfall, this saga represents a major compliance failure on Crypto.com's part. Experts say basic checks between the bank account and exchange account should have caught a million-dollar discrepancy.
The exchange deserves blame for lax oversight, though the couple seemingly made no effort to report the obvious error. Their decision to spend lavishly and transfer funds overseas compounded the initial mistake.
Cryptocurrency systems are defined by precise, automated record-keeping. This makes such a massive human error even more surprising. It underscores the need for vigilant compliance procedures across the growing crypto finance sector.
Can Bitcoin's Transparency Prevent Future Blunders?
Unlike private exchanges, Bitcoin operates as decentralized, public ledger validated by its community. Transactions and account balances are openly verifiable. This radical transparency could prevent such accounting mishaps.
Of course, human-run companies can always make mistakes. But Bitcoin's ethos of open-source verifiability aims to minimize misplaced trust in centralized authorities. People rely less on fallible intermediaries and more on direct, mathematical proof.
As crypto adoption spreads, Bitcoin's emphasis on individual sovereignty and elimination of counterparty risk provides an alternative model. Exchanges require ever-stricter compliance to earn users' confidence.
History Echoes in Crypto Compliance Failures
This exchange's blunder echoes earlier financial mishaps stemming from lackadaisical oversight. In 2009, a French trader's employer accidentally paid him a bonus of $233 million due to missed decimal points. He conversely won praise for reporting the obvious mistake.
In the 19th century, a broken telegraph transmitted the wrong gold price, briefly valuing the metal above diamonds. Traders quickly exploited the error. The crypto exchange and Melbourne couple show similar lapses persist despite modern technology.
Financial platforms must apply robust compliance to uphold public trust. Cryptocurrency's transparency and user empowerment may offer solutions. But as this case proves, human accountability remains vital.
Should financial platforms bear responsibility for major accounting errors?
Crypto.com deservedly faces blame for its lax controls enabling a multi-million dollar undetected transfer. Financial institutions have a duty to prevent such glaring oversight, through strict compliance and auditing policies. The public depends on competent stewardship of monetary systems.
However, Manivel and Singh clearly chose to spend money they must have known was not rightfully theirs. While the exchange's negligence enabled their actions, the couple's alleged recklessness merits legal consequences.
Ultimately, all participants in financial systems share responsibility for upholding integrity and preventing errors. Technology can help avoid misplaced trust, as Bitcoin's transparency aims to do. But diligent human governance remains essential.
How can cryptocurrency exchanges rebuild public confidence after compliance failures?
Mistakes like Crypto.com's multi-million dollar blunder damage users' trust. To restore confidence, exchanges must implement stringent controls and auditing procedures to prevent errors. Publishing external audits can prove to customers that oversight is adequate.
They should also establish insurance policies and emergency funds to quickly reimburse users for any issues. Providing complete transparency into operations and money flows demonstrates commitment to integrity.
Finally, emphasizing decentralized models where users hold their own funds can reduce reliance on exchanges. Ultimately rebuilding trust requires exchanges to show users their interests come first, not just profits. This means preventing compliance failures before they occur through safety measures and responsible policies.