Malta’s Financial Services Arbiter orders Crypto.com to refund scam victim

Malta’s Arbiter for Financial Services has ordered the company behind Crypto.com to partially refund a scam victim.

The boiler room fraud victim had transferred €11,163 to two external (self-hosted) wallets that were later found to be fraudulent.

While the victim acknowledged that he made the transfers himself and admitted partial negligence, he sought reimbursement of 70 per cent of his loss from Foris DAX MT, around €7,841.

Foris DAX MT, which trades under the Crypto.com brand, is an MFSA-licensed Crypto-Asset Service Provider headquartered in St Julian's.

The victim cited a failure of vigilance under anti-money-laundering and Know Your Customer rules, as well as a lack of assistance that worsened his distress.

Foris declined the refund, stating that while it sympathises with the victim, the transfers were carried out at his sole request. 

It also referred to its own terms and conditions, which state that users are responsible for ensuring the accuracy of instructions issued to Crypto.com and that error may result in the irreversible loss of their digital assets.

Moreover, the user had ticked a box expressly declaring himself the owner of the wallets and had clicked through multiple scam warnings at whitelisting and at every withdrawal, confirming he accepted the risks and the irreversibility involved.

Rather than AML enforcement, which sits with the FIAU, Arbiter Alfred Mifsud focused on whether Foris met its Travel Rule duties. 

Under EU regulations, transfers above €1,000 to a self-hosted address require the provider to actively verify ownership using listed methods that go beyond ticking a box. 

He therefore partly upheld the victim’s complaint and ordered Foris to bear 40 per cent of the loss and pay €4,465, plus interest.