Sask. man in court battle with crypto exchange lost over $240K to fraud

A Sask. man who lost $240,000 in a cryptocurrency fraud is unlikely to get his money back anytime soon, a judge ruled.

A 66-year-old retiree from Cabri, Sask., signed up with a company called Honeybadger Enterprises to purchase cryptocurrency, a type of digital money.

He signed a pre-authorized debit agreement when he registered, allowing the company to withdraw money from his Innovation Credit Union account to make purchases, according to a King’s Bench court decision released last month.

Shortly after signing up, his email account was compromised, and a person claiming to be him continued to purchase cryptocurrency. HoneyBadger then “delivered cryptocurrency into virtual wallets unlikely to be seen again,” Justice Charlene Richmond writes.

When the man became aware of this, he contacted his credit union, which was able to retrieve $240,000 from HoneyBadger’s accounts.

The money was back in his account, but it wasn’t clear whether it still legally belonged to him.

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HoneyBadger claims it’s entitled to that money because it transferred cryptocurrency in accordance with emailed instructions, while the man argues he is entitled to the money because he did not request, nor receive the cryptocurrency.

“Unfortunately, the cryptocurrency is unlikely to ever be recovered and ultimately the question of who shall bear the loss from the actions of this theft must be answered,” the court document said.

An order preserving the funds for a period of 30 days was granted in June, and was extended in July. HoneyBadger called for another extension but the man was opposed. Ultimately, a judge ruled in favour of HoneyBadger to preserve the funds.

“Although I am sympathetic that [he] finds himself embroiled in circumstances brought about by an unknown fraudster, I am nonetheless satisfied that HoneyBadger should have the preservation order as requested,” Richmond wrote in her decision on Sept. 19.

The preservation order will freeze the funds until the case is brought before the court again to decide who is liable for the loss, or until the two parties come to an agreement.