The Australian Securities and Investments Commission (ASIC) has accused the owners of Gold Coast-based business A One Multi of scamming 92 investors out of AU$25 million (US$18 million) and are now in possession of a cold wallet believed to hold almost US$20 million in Bitcoin purchased with the defrauded funds, according to a report by the Sydney Morning Herald.

Fast facts

  • ASIC alleges Aryn Hala and Heidi Walters defrauded investors who were trying to gain early access to their superannuation accounts — government-mandated retirement funds — and had used the fraudulent money to buy Bitcoin, a Tesla, a Ferrari and other luxury goods, and weight loss surgery, as well as to make significant donation to the pair’s church. ASIC has also won a travel ban against the pair and freezing orders over their assets, including the luxury cars.
  • Hala and Walters have hired a lawyer, indicating they may wish to challenge the charges, who told the Sydney Morning Herald the pair have been openly assisting ASIC with their inquiries and they hope the investigation would be concluded quickly.
  • But investigators may have a hard time accessing any cryptocurrency held in the cold wallet allegedly connected to Hala. As one blockchain expert told Forkast.News: “It is theoretically infeasible to get and access the cryptocurrency stored in the cold wallet, even if the police have got the physical wallet, due to the cryptographic encryption or algorithms which is originally planned to protect the owner of the wallet,” said Joseph Liu, director of the Monash Blockchain Technology Centre, at Melbourne’s Monash University.  “It is equivalent to the fact that if the owner forgot the password of his cold wallet, there is almost no means for the owner to recover the crypto stored in the cold wallet.”
  • “It may be different from the hot wallet or the wallet from the exchange,” Liu added, “which may have some backdoor or other recovery method, and therefore I believe the cyber criminals will usually not use the wallet offered by the exchange.”
  • This case also raises concerns regarding the oversight capacity of leading Australian crypto exchange CoinSpot, which Hala used to facilitate his crypto trading, as the firm was unable to provide authorities with adequate know-your-customer documentation regarding Hala’s accounts. ASIC instead relied on traditional bank accounts to verify that Hala was a customer of the exchange.
  • Crypto firms’ ability to properly adhere to KYC and anti-money laundering requirements is part of an ongoing debate in Australia as many crypto businesses have reported being “de-banked” by the country’s banks. While the banks maintain this is due to these firms’ ability to properly adhere to these requirements, but some in the crypto industry claim it is anti-competitive behavior.
  • Superannuation has become a tough political subject in Australia in recent years, as the country’s government controversially granted early access to people’s super as a means of financial support as the Covid-19 lockdowns forced millions across the country out of work.