Ruling notes plaintiff ignored trading platform’s many warnings
The British Columbia Supreme Court has refused to hold NDAX Canada liable for the losses of a plaintiff who fell victim to a cryptocurrency scam after believing in an investment proposal that sounded too good to be true.
“This BC case clarifies that crypto platforms are not de facto guardians of investor decisions,” comments Daniel Walker, managing partner of Bobila Walker Law in Toronto. “The Court recognized that NDAX provided multiple, escalating fraud warnings, including direct verbal cautions, and that once a user insists on proceeding, the responsibility for loss shifts squarely to the individual.”
In Xu v NDAX Canada, 2025 BCSC 2048, the defendant NDAX was a crypto assets trading platform, registered as a money service business with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
The plaintiff testified that an unidentified person befriended her and earned her trust. He convinced her to make initially small investments, which resulted in substantial returns, before persuading her to buy a significant sum of cryptocurrency, with the expectation of daily returns in the range of one percent.
To embark on this investment opportunity, the plaintiff remortgaged her house and borrowed money from another friend. On Apr. 10, 2023, she opened an account on the NDAX online platform.
NDAX sought and verified the plaintiff’s personal information and government-issued identification, pursuant to FINTRAC compliance requirements. She clicked the “accept” button before reading the user agreement and risk statement.
The plaintiff deposited sums amounting to $671,000 into her account between Apr. 11, 2023 and May 17, 2023. She used these funds to buy units of Ethereum, a cryptocurrency.
On Apr. 18, 2023, the plaintiff sought to transfer the Ethereum to an external wallet. She provided NDAX with a personal wallet address to arrange the transfer.
NDAX identified suspicious financial activity. It sent the plaintiff numerous warnings and disclosures regarding the risks associated with completing the transaction.
The plaintiff did not listen to these warnings. Instead, she transferred all the purchased Ethereum to a third party’s cryptocurrency wallet and made two more transfers to that recipient wallet. She later learned she lost the funds in a cryptocurrency scam.
NDAX not liable
The Supreme Court of British Columbia dismissed the plaintiff’s claim based on negligence. The court ruled that NDAX did not breach its duty of care or cause the plaintiff’s admittedly regrettable losses.
“If an investment proposal sounds too good to be true, it probably is,” wrote Justice Lindsay LeBlanc for the court. “That was the case for the plaintiff who found herself to be the unfortunate victim of a cryptocurrency scam.”
The court noted that NDAX did not know that a scammer controlled the recipient wallet at the time the plaintiff tried to execute the first transfer. The court said NDAX provided the plaintiff with the following warnings or disclosures:
- the withdrawal crypto risk disclosure statement
- a secondary disclosure to obtain the plaintiff’s confirmation that she wished to continue
- a third warning from an NDAX employee who sought more information about the transaction and cautioned the plaintiff against proceeding because she was likely the subject of a scam
- a fourth warning from an NDAX compliance officer, who confirmed the plaintiff’s understanding of the associated risks and her instructions to proceed, following her threat of a lawsuit if NDAX declined to process the requested transfer
The court pointed out that the plaintiff:
- refused to listen to the multiple clear warnings
- insisted that she wanted to move forward with the transfer
- gave false and misleading information in response to questions from NDAX that aimed to identify the recipient wallet
- proceeded with subsequent cryptocurrency transactions, while continuing to ignore the warnings
The court found that it could not expect NDAX to do anything further to prevent the plaintiff’s losses. The court saw no basis to conclude that more warnings would have persuaded the plaintiff not to proceed with the cryptocurrency transfers.
“Xu v. NDAX is significant because it adapts traditional banking law to the realities of crypto trading,” Walker says. “Exchanges must exercise reasonable care and document their warnings, but they aren’t required to override lawful customer instructions. It strikes a pragmatic balance: protect users through transparency and education, but preserve autonomy in financial transactions.”
