KUALA LUMPUR: The High Court has ordered the government to return about 176 Bitcoins (BTC) to nine victims of the Bitkingdom cryptocurrency investment scam.
The cryptocurrency forms part of the 497.82 BTC, valued at US$17.64 million as of Nov 1, 2023, seized from two digital wallets belonging to Mohammad Fadino Khairuman and Arsyan Ismail.
Judge Datuk Mohd Arief Emran Arifin made the order after finding that the nine people who had invested in the scheme between 2015 and 2016 had legitimate ownership rights over the seized cryptocurrency.
In his grounds of judgment dated Oct 12, he said the claimants had proven that they were deceived into depositing their Bitcoins into Bitkingdom, which had promised daily returns of about one per cent.
He said the cryptocurrency was transferred from the Bitkingdom wallet through several intermediary wallets before ending up in digital wallets belonging to Fadino and Arsyan.
Arief said the transfers, described as a "layering process", did not extinguish the victims' ownership rights over the cryptocurrency.
"The claimants did not lend their Bitcoins to the respondents, and they are not asserting a debt.
"They are saying that the Bitcoins were obtained from them by cheating, and that the Bitcoins, or what now stands in its place, is still theirs," he said.
Arief said property obtained through fraud did not become the legitimate property of the fraudster simply because it had been transferred to another account.
"Where property is obtained by fraud, the law does not treat the fraudster as acquiring a clean title to it as against the person defrauded."
Arief rejected the prosecution's argument that the claimants could not establish legitimate legal interests in the seized cryptocurrency as the Bitcoins had been transferred through several wallets and mixed with other digital assets.
The judge said accepting such an argument would effectively allow fraudsters to deprive their victims of their property by laundering the proceeds of their crimes.
The judge said there was also insufficient evidence to establish that the claimants had participated in, colluded in or were involved in the cheating or money laundering activities.
He ruled that all nine claimants had established legitimate legal interests in the seized cryptocurrency under Section 61(4) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).
However, Arief said the claimants were not entitled to recover the full amount of Bitcoins they had deposited as the total losses suffered by Bitkingdom investors exceeded the cryptocurrency seized by the authorities.
The court was told that 207 police reports had been lodged by investors involving losses totalling approximately 1,023 BTC.
The nine claimants had collectively deposited 362.04 BTC into the scheme.
Based on the amount seized, the judge ruled that they were entitled to recover a proportionate share amounting to approximately 176.18 BTC.
The remaining seized cryptocurrency, estimated at 321.64 BTC, is to be forfeited to the government under Section 56(2) of AMLA.
On Dec 23 last year, the High Court ruled that the seized cryptocurrency constituted proceeds of unlawful activities involving cheating under Section 420 of the Penal Code through the Bitkingdom investment platform.
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