In a cautionary tale reported by The Straits Times, a Singaporean businessman lost over $2 million after hastily investing in a fraudulent ‘crypto bank.’ The businessman believed he was entering a lucrative deal with the “Royal Eastern Bank,” allegedly valued at over $20 million. However, this valuation was fabricated, with no genuine financial assessment to support it.
The businessman was lured by an enticing offer to buy a quarter stake in a new offshore bank dealing in cryptocurrency. Excited by the opportunity, he failed to verify the legitimacy of the deal.
Without performing due diligence, the businessman transferred an initial investment sum of over $4 million. He believed the Royal Eastern Bank’s purported $20 million valuation, not realizing that such figures could be entirely fabricated.
One of the three partners involved in the scheme found it unusual that the businessman transferred such a large amount without verifying the bank’s true value or operational status. This partner, a Singaporean based in Australia, had been tasked with managing the bank’s backroom operations. He later revealed that he was also deceived by his co-partners.
Upon receiving a tip-off that the other two partners were embezzling funds, this partner warned the businessman, preventing him from losing an additional $1 million. He described the entire deal as a scam and expressed feeling betrayed by his co-partners, who had effectively “pulled the rug out from under him.”
Left to face the consequences, the conscientious partner agreed to return about $1.8 million from the 2019 deal, managing to repay $1.2 million before the investor sued him for the remaining amount. When the case reached the High Court in early 2024, Judge Hri Kumar Nair found the investment was marred by deception and that the Royal Eastern Bank was never going to become a licensed operational entity.
The court determined that the businessman, who had paid $4 million without receiving the promised 20% stake, was entitled to his money back. Since the sued partner had already returned most of the funds he received, he was ordered to repay only the remaining $600,000. Despite this, the businessman still lost over $2 million that had been paid to the other two partners.
As cryptocurrency investments become more popular, so too does the sophistication of related scams. This case serves as a stark reminder of the necessity for thorough scrutiny and skepticism to protect against financial deceit.