After further investigations into the disappearance of customers’ funds on ACX, liquidators have revealed the possible involvement of former and current executives at the cryptocurrency exchange’s parent company.
Operated by Blockchain Global, ACX was one of the prominent cryptocurrency exchanges in Australia before it abruptly collapsed in early 2020, leaving customers scratching their heads with losses. Total customer losses at the exchange have been estimated at $50 million.
Corporations Act Violation
According to fresh coverage from ABC, liquidators have reported one former and two current directors of Blockchain Global to the Australian Securities and Investments Commission (ASIC) for potential breaches of the Corporations Act related to the crypto exchange.
Andrew Yeo, a liquidator from Pitcher Partners, wrote to the ASIC, alleging that current directors Sam Lee and Zijing ‘Ryan’ Xu and former director Liang ‘Allan’ Guo had misused customers’ funds at the exchange.
Fund Commingling
Highlighting the potential misappropriations, Yeo stated that the executives commingled customers’ funds with company funds and used them to invest in other companies and for personal expenses, including making mortgage payments, without informing customers.
“What we have been able to ascertain, however, is that those funds were mixed with other company funds and used for a series of other purposes. They included things like initial coin offerings, other startup businesses, a number of which ultimately failed, and the investments were lost,” Yeo said.
According to Yeo, customers’ funds were transferred between multiple bank accounts owned by related trusts and companies and then moved into online and offline digital wallets.
Yeo revealed that part of the funds was loaned to related businesses specializing in arbitrage trading, which involves buying an asset in one market and selling in another at a higher price.
The liquidator added that Guo and Lee personally transferred over $1.7 million from customers’ deposits to invest in publicly listed shares “put in the name of Mr Guo’s family trust and for the benefit of Blockchain Global.”
Yeo has recommended that the ASIC investigate the executives for potential breaches of the Corporations Act. In response, the financial regulator said it will take necessary actions when there is sufficient evidence.
Liquidators seek to recover between $12.2 million and $42.9 million from Guo and between $11.1 million and $38.9 million from Xu.
