A man who created a cryptocurrency wallet was targeted by scammers who instructed him to open it and transfer the cryptocurrency to them. When his bank alerted him to the scam, he stopped the transfers with $11,000 remaining in the digital wallet. Later, when he tried to access the wallet, he was unable to do so and could not locate a back-up file. He told the Insurance and Financial Services Ombudsman scheme that the platform should reimburse him and that he was not adequately informed about the need to back up the wallet, with no clear warnings about the risks.
The IFSO examined the setup prompts, links, platform actions when the issue was reported, and the terms of use. It found that during setup, the app explained that the wallet should be backed up and that backing up was the only way to recover funds, and that the platform could not access or restore wallets for customers. The set-up screens also included links to information about backing up and the consequences of not doing so. The complaint was not upheld.
Alex Sims, a professor of commercial law at the University of Auckland, said people probably did not realise the limits on accessing cryptocurrencies and education was needed. Stevens said cryptocurrency platforms were different from traditional banking services and it was vital that people pay close attention to the setup instructions. Internationally, there have been cases where people have accidentally lost access to their crypto wallets and millions of dollars. A Welsh man said he unintentionally dumped 7500 bitcoin units in a landfill.
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