rewrite this title ASIC Sues Former Blockchain Global Exec Over $20M in Unpaid Customer Claims – Decrypt

A former director of the collapsed Australian crypto exchange ACX.io is facing civil court action over what regulators allege are serious breaches tied to the disappearance of millions in customer funds.

On Wednesday, the Australian Securities and Investments Commission announced proceedings against Liang “Allan” Guo, accusing him of misusing user funds, failing to keep proper financial records, and making misleading statements while serving as a director at Blockchain Global Ltd. 

The company, now in liquidation, operated the ACX exchange, which froze withdrawals in late 2019 and ultimately left over $20 million in claims from former customers.

The lawsuit is the culmination of a years-long investigation into one of Australia’s earliest and most damaging crypto exchange failures. 

Liquidators estimate that ACX users are owed at least $22.7 million of the company’s total debt of $58.6 million to unsecured creditors.

The regulator had previously halted Blockchain Global’s 2017 IPO bid and refused it a financial services license, citing governance concerns.

ASIC launched its formal investigation into the exchange’s collapse in January 2024. Weeks later, the Federal Court imposed interim travel restrictions on Guo. 

When those expired on August 20, he left the country on September 23 and has not returned.

Same story, different exchange

In an October 2023 report to ASIC and creditors, liquidator Andrew Yeo of Pitcher Partners found that customer funds were co-mingled with company money and redirected into related entities, as cited by ABC News.

That’s reminiscent of former global exchange FTX’s misuse of customer funds, where billions were allegedly diverted to its affiliated trading firm, Alameda Research, without user consent.

Guo told liquidators that wallet credentials for Blockchain Global’s crypto holdings, worth several million dollars, were lost when his laptop was stolen in China in 2019. 

As first reported in December 2021 by The Sydney Morning Herald, no police report was ever filed to substantiate the claim.

Blockchain Global’s other directors, Xue “Sam” Lee and Zijang “Ryan” Xu, are also under investigation by ASIC. 

In the same month the probe began, Lee was charged by U.S. authorities with allegedly running a $1.89 billion Ponzi scheme under the HyperTech umbrella, which included HyperFund and HyperVerse.

U.S. prosecutors unsealed criminal wire fraud and securities fraud charges against Lee, accusing him of promoting bogus investment platforms with false promises of crypto mining returns. 

The SEC also filed a civil complaint the same day against Lee and promoter Brenda “Bitcoin Beautee” Chunga, who later pleaded guilty to conspiracy to commit securities and wire fraud.

Edited by Sebastian Sinclair