A brazen $14.2 million cyber heist has sparked a bizarre legal battle between one of Canada's largest banks and one of the country's largest crypto services providers.
Nearly three months after hackers transferred millions of dollars from Canada Western Bank's accounts payable system, a B.C. Unfrozen accounts belonging to the company's digital platform.
The ruling comes after Canadian Western's lawyers argued at one point that it was best to “make sure that this type of fraud is not accessible so that it does not encourage others to attempt similar conduct.” The decision came after an unusual and confidential legal process.
Meanwhile, an Ottawa man whose name is on the national bank account the scammers used to move the cash said he doesn't understand why CBC was the first to hear about it.
“It's a little strange that you contacted me in the first place,” said the 24-year-old, who CBC agreed not to name for fear of jeopardizing his employment or safety.
“I was shocked,” the man said.
“There are no banks or anything,” he said. “And since you're doing this primarily for your own story, imagine if you hadn't told me, I would have just lived my life without knowing anything. .”
“Third Party Threat Actor”
According to court documents, the money was transferred on Jan. 23 from an account used by Canadian Western's finance department for accounts payable to a national bank account in the 24-year-old's name.
“The mechanism of this scheme appears to be an account takeover scam in which a third-party threat actor gains access to the credentials of account holders on the platform,” Canadian Western's lawyers wrote in the application.
“This scheme was executed by a third-party threat actor and resulted in the transfer of at least CAD 14,200,000 from CWB funds.”
The thieves attempted a third transfer of an additional $7.8 million, but were unsuccessful, according to the documents.
The bank identified the fraudulent transaction two days after it occurred. But by then it was too late. The funds had already been transferred to an Alberta credit union account under the name CLTS Technologies (Aquanow's business name).
Court documents show that fraudsters used Aquanow accounts to exchange stolen funds for the cybercurrencies Bitcoin and Ethereum, quickly moving Bitcoin from wallets on digital platforms to external wallets and then to Ethereum. It was revealed.
However, the legal battle was just beginning. Canada Western Bank attempted to recover funds by targeting large wire transfer and foreign exchange accounts held by AquaNow at BMO.
“deserves reprimand or reprimand”
The bank acquired the so-called “.Former part-timer” An order is a legal term for a proceeding representing the interests of only one party, freezing accounts containing millions of dollars.
Aqua Now claimed that the order had caused “massive disruption to Aqua Now's business and damage to its reputation.”
To make matters worse, the order itself was sealed and BMO was ordered not to explain why. That meant Aquanow had to go to court just to find out why his company's business was in turmoil and who was to blame.
In a filing asking for the sealing order to be revoked, Aqua Now's lawyers called the situation “unusual” and described the freezing order as “a confidential order and a remedy that would be impossible to obtain in civil litigation.”
In a decision this week reversing the order, B.C. Supreme Court Justice Linda Lew faulted Canadian Western Bank, which left the courtroom with the impression that AquaNow may have been involved in wrongdoing.
He said the bank's lawyers should have told the court that “Aqua Now was a money services business where large amounts of money legitimately moved in and out of its accounts every day.''
The judge also said, “Although it is possible that the alleged fraudster transferred CWB funds to Aquanow's account, there was no evidence that Aquanow participated in the fraud.”
Mr Lu said the freezing order was obtained “unreasonably”. He also said damages were warranted because “the degree and scope of the negligence merits a rebuke or rebuke.”
“It’s really a huge amount of money.”
Canadian Western Bank said in a statement to CBC that the bank was “disappointed” by Lew's decision, adding that it “has taken reasonable and necessary steps to preserve and recover funds stolen by sophisticated fraudsters, among other things. “Based on our belief that we have taken the necessary steps,” he said.
According to court documents, AquaNow reported the suspicious transactions to the Canadian Center for Financial Transaction Reporting and Analysis, but said it has not been contacted by law enforcement.
Canada Western Bank has not confirmed whether the theft was reported to police.
Apart from his lawyer, the only person named in court documents is a 24-year-old man. His first name, middle name, and last name were spelled correctly and listed in the national bank account used as the initial destination for the $14.2 million.
He told CBC that he once had an account at the bank, but the balance hadn't changed and the numbers didn't seem to match the numbers in court documents, so he believed someone had opened an account in his name. He said he became worried that he might
“It was quite confusing because it was a really high amount of money,” he said.
“I just need to know how to proceed with my own investigation, because no one has reached out to me specifically to see if it pertains to me.”
The man works for the Correctional Service of Canada, but his position does not involve him interacting with prisoners.
He said he had heard that there were other people with the same last name. But he wonders about the possibility of someone having the same middle name.
“That's why this is quite concerning, because that's my full name and I don't think there's anyone else out there with my full name,” he said.
A spokesperson for National Bank said it does not comment while legal proceedings are ongoing, and Canadian Western Bank said: “CWB is not in a position to comment on customers or accounts at other financial institutions.”
