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Recently, I sold cryptocurrency to someone in Australia via a bank transfer. I had him transfer the money from his bank to my TransferWise (Wise) AUD account. A few hours ago, I got an email from Wise saying the sender's bank wants the money back, but Wise is giving me the option to deny refunds. What should I do in this situation? I already gave him the cryptocurrency, so I obviously will be losing money if I agree to the refund. However, I don't want to get into lawsuits either. Thanks a lot.

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EDIT 1 Responding to the answer and comments, I have a few more details to add. The buyer, Andrew (I will omit his last name), has completed KYC verification on the platform that we were trading. Also, he sent money from an account in his name, and he provided the payment receipt, so it's implausible that this payment was unauthorized.

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    Bear in mind that the bank account used may have been hijacked by a third party so the person requesting to reverse the transfer may also be an innocent victim. That may not change what you do. Have you asked Wise if there was a reason given for the reverse? It would be useful to know whether the other party is claiming they never received what they bought (presumably you can prove you sent it to the correct address) or that a third party stole something (and whether they stole your bitcoin or their money is a question for the lawyers).
    – Eric Nolan
    Commented Mar 22, 2022 at 11:29
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    If the person in Australia hasn't got in touch to explain their legitimate reason for reversing the transfer - then very likely there isn't one. A lawsuit in any reasonable country would require that they've tried to resolve the dispute outside the court. And "I silently tried to grab their money" doesn't satisfy this.
    – Andrzej Doyle
    Commented Mar 22, 2022 at 14:35

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Welcome to the wonderful world of bank scams. It's a classic "I'll give you a reversible transfer for your irreversible one and then reverse it on you".

If you feel that you're in the right to deny the refund - you're lucky to be in a situation where you even have a say in that. This scam works precisely because bank-to-bank transfers are reversible while whatever you gave in return (crypto in your case, otherwise usually wired funds, cashier checks, gift cards) is not.

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In addition to the existing answers be very wary of any emails that appear to be from transferwise or the bank. They could easily be part of a phisihing scam

You should log into Transferwise directly and look if you can deny the refund there, and if not, contact Transferwise support through official channels about it

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