A British Columbia court has ruled that crypto exchange NDAX Canada was not at fault for a customer's C$671,000 (US$480,000) loss to an online scam, despite issuing repeated fraud warnings.
Investor Ignored Escalating Scam Alerts
In a written judgment released Monday, Justice Lindsay LeBlanc of the BC Supreme Court dismissed the claim brought by Victoria resident Yan Li Xu against Calgary-based crypto exchange NDAX Canada. The court found the platform had met its obligations after warning her four times that she was likely being defrauded.
Judge LeBlanc stated that while Xu's losses are "regrettable," "no liability rests" with NDAX Canada, which she noted was registered as a money service business with Canada's Financial Transactions and Reports Analysis Centre (FINTRAC).
The crypto exchange's warnings to Xu "could not have been clearer," Judge LeBlanc added.
How the Scam Unfolded
Court documents revealed that Xu, working as an accountant in Victoria, opened an NDAX account on April 10, 2023, after being persuaded by an online acquaintance to invest in a scheme promising returns of up to 1% per day.
To fund the investment, she remortgaged her home and borrowed money from a friend, then deposited C$671,000 into her account between April 11 and May 17, 2023, using the money to buy Ethereum.
On April 18, 2023, an NDAX employee contacted Xu seeking further information about the withdrawal and warned that the "transaction exhibited risk factors" and would be escalated for review. The call was recorded and later referenced in court.
Repeated Warnings Ignored
Following the initial warning, Xu sent several emails to NDAX demanding to "proceed with the withdrawal without delay." Her tone became increasingly insistent, and she warned that she might pursue legal action if the company did not comply.
When Xu attempted to transfer the crypto to an external wallet, NDAX issued a series of escalating warnings:
- A written risk disclosure
- A secondary confirmation notice
- Two follow-up phone calls
One of these calls came from compliance officer Julia Baranovskaya, who explicitly warned Xu that she was likely "being scammed."
NDAX ultimately processed her instructions, and the Ethereum was transferred to the scammer's wallet and lost.
Canada's Increasing Crypto Scrutiny
Xu's case comes as Canada intensifies enforcement around crypto-related compliance failures.
Earlier this week, the country's financial intelligence agency imposed a record C$176.9 million fine on Vancouver-based crypto platform Cryptomus for violating anti-money laundering laws. The penalty cited thousands of unreported suspicious transactions linked to child exploitation, ransomware, and sanctions evasion.
This represents the largest penalty ever imposed on a crypto company registered in Canada.
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