Crypto scam in UAE: How a fake trading firm stole Dh1.1m from an Arab woman

Two fraudsters established a fake online company using the name of a well-known trading firm and persuaded an Arab woman to invest in cryptocurrencies.

The result: the victim lost Dh1.1 million after being lured by promises of quick profits through a fraudulent investment scheme conducted under the name of a reputable trading company.

According to case details, an Arab woman fell victim to a scam orchestrated by two unidentified individuals who falsely claimed affiliation with a renowned trading company. They convinced her to invest her money in cryptocurrencies, promising substantial returns, and ultimately obtained approximately Dh1.1 million from her.

The victim later filed a civil lawsuit before the Dubai courts, seeking an order compelling two individuals she accused of receiving her funds to return the money and pay Dh400,000 in compensation. However, she was unable to substantiate her claims, leading the court to dismiss the case due to insufficient evidence linking the defendants to the disputed funds, proving that they had misappropriated them, or identifying the actual perpetrators behind the fraud.

How the story began?

The case stems from an Arab woman who entered the world of digital investments in pursuit of high financial returns after being introduced to two individuals who presented themselves as representatives of a reputable investment entity trusted by investors both within the UAE and abroad.

According to court documents, the claimant began transferring funds in multiple installments after receiving assurances of significant profits from cryptocurrency trading. She transferred thousands of dollars and Kuwaiti dinars through separate transactions, with the total amount eventually exceeding Dh1.106 million.

The claimant stated that those managing the purported investment regularly provided her with figures and performance indicators suggesting steadily increasing profits. Encouraged by these reports, she continued investing additional funds, believing she was building a successful investment portfolio capable of generating substantial returns within a short period.

However, the situation took a different turn when she sought information regarding her funds and the profits allegedly generated from the trading activities. She was subsequently confronted with warnings indicating that the company she believed she was dealing with had become the subject of impersonation by unknown fraudsters who were exploiting its name to scam investors.

Turning to the courts

As a result, she initiated legal proceedings, seeking the recovery of the funds she had lost. She maintained that the defendants had induced her to transfer money under the guise of cryptocurrency investment opportunities.

During the proceedings, the claimant submitted several documents, including a consultancy report, a commercial license, and other records that she argued supported her account. She also requested that the owner of a commercial establishment be added to the case, claiming a connection to the entity she believed had caused her losses.

After reviewing the request, the court approved the inclusion of the additional party, finding a link between him and the institution involved in the dispute. The court then proceeded to examine the merits of the case and the evidence submitted.

In its reasoning, the court emphasized the well-established legal principle that the burden of proof rests upon the party asserting a claim, while liability cannot be presumed without clear and convincing evidence to the contrary.

The court further noted that it had examined all documents submitted by the claimant. While some included forms and records related to investment portfolio management bearing various names and stamps, none of the documents directly proved that the defendants had received or misappropriated the disputed funds.

Legal consultants’ report

The court also observed that the consultancy report submitted as part of the case file focused primarily on the value of the funds allegedly lost by the claimant. However, it failed to clearly identify the party responsible for the fraud or the individual who had actually obtained the money. Consequently, the report was deemed insufficient to establish the defendants’ liability.

The judgment further stated that the case file contained no bank transfer records or financial documents demonstrating that the funds had been transferred to accounts belonging to the defendants. Nor was there evidence of a direct contractual relationship between the claimant and the defendants, or proof that they had communicated with her, managed her investments, or received her money.

The court stressed that mere suspicion or belief regarding a person’s responsibility for a financial loss is insufficient to establish civil liability or compel repayment. Rather, liability requires proof of wrongdoing, attribution of that wrongdoing to the party against whom the claim is made, evidence of damage, and a causal link between the two.

The court concluded that although the claimant alleged that she had been the victim of a fraudulent scheme, she failed to provide evidence directly connecting the defendants to the alleged fraud. As a result, the essential legal elements of civil liability were not established.

Accordingly, the court found that the claimant had failed to prove her case to the standard required by law and dismissed the lawsuit, ordering her to bear the legal costs of the proceedings.