The British Columbia Court of Appeals recently delivered a ruling that sends a chilling message to Canadians investing in cryptocurrency: platforms may not be held liable when users fall victim to fraud, even in cases of devastating financial loss.
Last week, the court dismissed an appeal from Jane Doe (name protected by publication ban), who lost her life savings and home equity after being manipulated by scammers posing as investment advisors. Despite remortgaging her home and transferring approximately $670,000 worth of cryptocurrency to fraudsters through a major exchange platform, the court determined the platform bore no responsibility.
“The exchange functioned exactly as intended,” wrote Justice Patrice Abrioux in the unanimous decision. “While deeply unfortunate, the appellant’s losses stemmed from her own decisions to transfer funds to wallets controlled by the fraudsters.”
The case began in 2021 when Doe, a 43-year-old healthcare worker, was contacted through social media by individuals claiming to represent a legitimate investment firm. Over several months, they gained her trust through what appeared to be successful small investments, eventually persuading her to invest more substantial amounts.
I reviewed the 32-page ruling, which reveals the sophisticated nature of the scheme. The fraudsters created convincing duplicate websites mimicking legitimate trading platforms, complete with professional graphics and falsified performance data. They coached Doe through the process of obtaining multiple loans against her primary residence and purchasing cryptocurrency through a major Canadian exchange.
“These platforms operate under a regulatory framework that primarily focuses on money laundering prevention rather than consumer protection,” explains Vanessa Ellis, digital rights attorney with the Canadian Civil Liberties Association. “Consumers often don’t realize they’re essentially on their own once funds leave their account.”
The court’s decision hinged on the terms of service agreement, which Doe had electronically signed when creating her account. The agreement explicitly stated that the platform functioned merely as an intermediary and bore no responsibility for transactions once completed.
According to court documents, the platform did flag several of Doe’s transactions as potentially suspicious but allowed them to proceed after she confirmed they were intentional. The fraudsters had coached her on how to respond to such security checks.
Dr. Michael Chen, cybersecurity researcher at University of Toronto’s Citizen Lab, told me this ruling highlights a dangerous gap in Canada’s digital financial protection landscape. “We’re seeing a perfect storm of regulatory ambiguity, sophisticated criminal techniques, and platforms designed to prioritize frictionless transactions over consumer safety.”
Statistics from the Canadian Anti-Fraud Centre show cryptocurrency scams have increased 213% since 2020, with losses exceeding $75 million in 2024 alone. The median loss per victim stands at approximately $20,000, but cases involving home equity, like Doe’s, can be catastrophically higher.
The court acknowledged the devastating impact on Doe, who has since declared bankruptcy and moved in with family members. However, Justice Abrioux emphasized that expanding platform liability would “fundamentally alter the nature of cryptocurrency exchanges” and potentially make them unviable in Canada.
Ryan Clements, a securities law professor at the University of Calgary, believes the ruling exposes the need for regulatory reform. “Right now, we have a system where platforms enjoy the benefits of facilitating these transactions while bearing almost none of the risks,” he said during our phone interview. “This creates a significant consumer protection deficit.”
The platform’s defense centered on the argument that it merely provided the infrastructure for cryptocurrency transfers and had no way to determine if recipients were legitimate. Their terms of service explicitly stated users bear full responsibility for verifying the legitimacy of any transaction.
I obtained copies of the security warnings presented to Doe during her transactions. They included general cautions about irreversibility and fraud risks, but critics argue these warnings are typically buried in lengthy user agreements or presented when users are already committed to completing transactions.
The ruling comes at a time when Canadian financial regulators are developing new frameworks for cryptocurrency oversight. The Canadian Securities Administrators proposed new guidelines earlier this year, but consumer advocates argue they don’t adequately address fraud protection.
“There’s a fundamental misalignment between how these platforms present themselves to consumers and their actual legal obligations,” said Ellis. “They market themselves as safe, trustworthy financial services while their terms of service position them as mere technology providers.”
For Doe, the ruling ends a three-year legal battle that her lawyer described as “adding insult to injury.” She has exhausted her legal options unless the Supreme Court of Canada agrees to hear the case, which legal experts consider unlikely given the contractual nature of the dispute.
The RCMP’s Integrated Market Enforcement Team continues to investigate the fraud itself, but recovery of funds remains improbable. The cryptocurrency was transferred through multiple wallets and likely converted to untraceable forms within hours of the transactions.
For now, the ruling stands as a stark reminder that in Canada’s cryptocurrency landscape, the principle of caveat emptor—buyer beware—applies more strictly than many consumers realize.
