Bybit insider fraud: Singaporean woman gets nearly 10 years for $4.2M theft

Singapore’s financial sector has been rocked by one of the most elaborate insider fraud cases in the cryptocurrency space.

Strait Times, a Singaporean news outlet reports, Ho Kai Xin, a 32-year-old former outsourced payroll manager at Bybit Fintech, has been sentenced to nearly ten years in prison for stealing 5.7 million SGD ($4.2 million) in crypto.

Her scheme, which spanned over a year, involved falsifying payroll records to divert funds into her own accounts.

The case has highlighted significant vulnerabilities in internal security measures at crypto firms, particularly those relying on third-party contractors for payroll processing.

With increasing scrutiny on digital asset companies, Bybit’s failure to detect the fraudulent transactions for months underscores the broader challenges of financial security in the sector.

The sentencing also signals a growing crackdown by Singaporean authorities on financial crimes involving cryptocurrencies.

Crypto payroll loophole

Ho’s fraudulent activities began in May 2022, when she manipulated Microsoft Excel spreadsheets to divert payroll payments from Wechain, Bybit’s payroll processing firm, to her own accounts.

She altered transaction details, ensuring that the stolen funds—initially 117,000 SGD ($87,417)—were sent directly to her bank instead of employee wallets.

Encouraged by the success of her initial theft, she escalated her activities, eventually siphoning off millions in USDT.

Court documents reveal that between May and August 2022, Ho directed eight major crypto transfers from Bybit to her digital wallets.

She then converted the stolen Tether (USDT) into fiat currency, using six bank accounts and four electronic wallets across multiple crypto platforms to obscure the money trail.

This level of sophistication in laundering stolen crypto funds highlights the regulatory gaps in monitoring insider transactions within the sector.

The fraud went undetected for months until a Wechain finance director flagged unusual transactions in September 2022.

Following an internal investigation, the company reported the fraud to the police in February 2023, leading to Ho’s arrest in April.

Lavish spending spree exposes stolen crypto funds

Rather than concealing her wealth, Ho openly indulged in luxury purchases that raised suspicions.

She placed a 750,000 SGD ($560,388) down payment on a penthouse worth over 3.7 million SGD ($2.7 million), despite her modest salary.

She also spent nearly 840,000 SGD ($627,633) on luxury goods, including sunglasses, bags, shoes, and jewellery from Louis Vuitton.

Her reckless spending continued even after authorities froze her assets.

In January 2024, Ho was sentenced to six weeks in jail for violating court orders after she continued to use stolen funds.

She had been explicitly instructed not to touch the money but proceeded to spend large sums anyway.

This defiance further strengthened the prosecution’s case against her.

Singapore’s crackdown on crypto fraud intensifies

Ho’s sentencing marks one of Singapore’s toughest rulings against crypto-related financial crime.

The country has positioned itself as a regulated hub for digital assets, implementing strict licensing rules for exchanges and payment providers.

This case has exposed potential weaknesses in how payroll transactions are monitored, particularly when outsourced to third-party firms.

The Monetary Authority of Singapore (MAS) has been ramping up regulatory oversight, particularly on anti-money laundering (AML) compliance.

In the wake of Ho’s case, industry experts anticipate tighter controls on crypto firms’ payroll processes and financial reporting.

Companies handling large amounts of digital assets may face stricter requirements to track transactions and conduct regular internal audits.

Ho’s nearly ten-year prison sentence underscores Singapore’s firm stance against financial misconduct in the digital asset industry.

As crypto adoption continues to grow, firms will need to enhance internal controls to prevent similar breaches.

Meanwhile, regulators are expected to impose more stringent policies to mitigate insider fraud risks within the industry.

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