Case Studies

Convincing the Crypto Exchange to Take Responsibility

Case Study: Convincing the Crypto Exchange to Take Responsibility

 

This case involved the following MyChargeBack services: a cryptocurrency blockchain analysis and a legal demand letter.

The Basis for the Dispute

G.B. is a resident of the United States who occasionally buys and sells various cryptocurrencies as part of his investment activities. He wanted to make a substantial transfer of 137 Binance coins (BNB) into Ethereum (ETC). Ethereum is one of the world’s top cryptocurrencies after bitcoin. The same is true of Binance coin.

The currency transfer that G.B. was undertaking was a relatively straightforward and uncontroversial one. However, due to a simple misunderstanding, he made a minor procedural error in its initiation. G.B. attempted to make a straight trade instead of what the crypto exchange requires, which is to use a stablecoin intermediary. However, the exchange itself mistakenly allowed it, and then failed to issue a memo code.

The BNB disappeared from G.B.’s wallet, the ETH never appeared, and each attempt to contact the exchange for clarification and correction was met with delay and obfuscation. Finally, G.B. contacted MyChargeBack for assistance.

Strategies and Tactics

There was little question that our client deserved his money back. The only questions were how to go about recovering the money, and how difficult would the exchange make the task.

The first step was to perform a forensic investigation into the money trail from the moment the BNB left our client’s wallet until it ended up wherever its final destination might turn out to be. It is a commonly repeated fallacy that since cryptocurrency is encrypted, there is no way to trace it. In fact, even though transactions are anonymized, and tracing them can be complex, our team possesses highly sophisticated tools to accomplish the task.

In the end, we prepared a report for our client detailing the wallet addresses and transaction IDs pertaining to his lost currency. These wallet addresses could be linked to specific persons or entities. 

The next step was to have a law firm prepare a professional legal demand letter for delivery to the crypto exchange responsible for the foul-up. The letter alleged failure on the part of the exchange to follow accepted financial institution practices, not to mention their own rules. It was an understandable error for them to accidentally allow a transaction that didn’t follow their preferred procedures. But their apparent inability or unwillingness to attempt to locate and return the lost money was inexcusable.

The MyChargeBack Difference

Sometimes all it takes is to be firmly shown the correct path to take, and a company will take it. Seeing no plausible way to continue to ignore its customer, the exchange accepted its error and returned the entire 137 BNB to his wallet. Interestingly, during the months that the case had dragged on, the dollar value of the asset had more than doubled. In effect, while he initially lost roughly $18,000, the cryptocurrency that was returned to him was worth over $41,000. That’s about as good as victory gets.

At a Glance: MyChargeBack in the U.S.

  • The case involved the loss of 137 BNB (Binance coins) in a botched cryptocurrency transaction.
  • Due to the volatility of BNB, the loss was valued at over $18,000 at the time, but soon grew to over $41,000.
  • Our efforts resulted in a complete refund of BNB, including its massive interim appreciation.

Payment made by the crypto exchange

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