Regulators Claw Back: ASIC Targets Ex-Blockchain Global Boss for $20M in Unpaid Customer Funds
Another day, another crypto executive learning the hard way that regulators keep receipts. Australia’s corporate watchdog just dropped the hammer.
Subheader: Play stupid games, win stupid subpoenas
The Australian Securities and Investments Commission (ASIC) filed suit this week against a former Blockchain Global executive—alleging they ghosted customers to the tune of $20 million. Because nothing says ’decentralized finance’ like good old-fashioned embezzlement.
Subheader: When ’trustless’ systems require maximum trust
The lawsuit reveals the ugly truth behind yet another crypto operation that treated client funds like personal slush funds. Pro tip for aspiring web3 founders: Ponzi schemes were illegal before Bitcoin existed too.
Closing thought: Maybe decentralized doesn’t mean what these guys thought it meant—unless they’re referring to their accountability being geographically dispersed across multiple jurisdictions fleeing regulators.
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
