Court orders woman who stole $5.6m in crypto, bought penthouse, to return sums

A woman who handled the payroll for a cryptocurrency exchange stole US$4.2 million (S$5.6 million) worth of crypto, then went on a spending spree, including buying a $3.7 million freehold penthouse after cancelling her Built-To-Order flat.

The High Court ordered Ms Ho Kai Xin to pay back the stolen sums, after crypto exchange ByBit Fintech successfully sued her to recover the stolen assets.

In his judgment issued on Tuesday, Justice Philip Jeyaretnam ruled that the holder of a crypto asset has a property right recognised in common law as a thing in action.

A thing in action is a right over intangible property that can only be enforced by legal action, not by physical possession. An example of a thing in action is a debt.

It is the first time that this has been decided in any common law court. 

Justice Jeyaretnam said his reasoning was not strikingly different from how the law approaches other social constructs, such as money.

“It is only because people generally accept the exchange value of shells or beads or differently printed paper notes that they become currency. Money is accepted by virtue of a collective act of mutual faith,” he said.

The judge examined this issue because he had to decide whether crypto assets are indeed property capable of being held on trust.

The case concerned a cryptocurrency called Tether, a “stablecoin” which is pegged to the US dollar and commonly referred to as USDT.

He concluded that the USDT, which may be transferred from one holder to another cryptographically without the assistance of the legal system, are things in action.

Like any other thing in action, USDT is capable of being held on trust, he said.

“While some people are sceptical of the value of crypto assets, it is worth keeping in mind that value is not inherent in an object,” he said.

“A wooden chair that can float is more valuable on a ship that is sinking than a golden throne would be.”

Ms Ho was employed by WeChain Fintech, which was engaged to provide payroll services for ByBit .

On Sept 7, 2022, ByBit discovered that eight unusual cryptocurrency payments had been made between May 31, 2022, and Aug 31, 2022.

A total of 4.2 million USDT was transferred to four “addresses”, which are encrypted digital folders that can receive and store cryptocurrency.

ByBit also discovered that $117,238.46 was transferred to her personal bank account in May 2022.

On Oct 4, 2022, after she was confronted with the investigation findings, Ms Ho told ByBit that the addresses belonged to her cousin, and that he had asked her to help make the transfers.

After this meeting, she ceased contact with ByBit and WeChain.

ByBit filed a lawsuit against her on Oct 12, 2022, and obtained injunctions to freeze the various assets.

In her defence filed on Nov 11, 2022, Ms Ho blamed her supposed cousin, Mr Jason Teo, for stealing the crypto from ByBit without her knowledge.

ByBit then discovered that she had made several big-ticket purchases from July 2022 onwards, including the penthouse apartment with her husband. She also spent $362,000 on a new car and $30,000 on Louis Vuitton goods.

She claimed that the penthouse was bought with money she earned from cryptocurrency trading, but did not provide details of the transactions.

On March 30, 2023, ByBit applied for summary judgment, which meant it was asking the court to decide in its favour without going through a trial. Ms Ho did not attend any court hearing or file submissions. 

ByBit’s case was that she had abused her position to transfer the assets to herself. It sought a declaration that Ms Ho holds both the USDT and the money on trust for ByBit, as well as an order for her to return the assets. 

Justice Jeyaretnam found that ByBit has established its case that she held the assets as a trustee by operation of law and had wrongfully transferred the assets.

“The evidence is indeed compelling that Ms Ho fraudulently transferred the crypto asset and the fiat asset to herself,” he said.

The judge noted that there was direct evidence that she owns the digital wallet associated with one of the addresses, as well as the circumstantial evidence of her unexplained spending spree.

ByBit’s lawyer, Mr Gerard Quek, told The Straits Times that his client has made a police report, but was unable to comment further as investigations are ongoing.