Australia’s ASIC Files a Crypto Lawsuit Against Former ACX Director Over Fund Misuse

Highlights:

• ASIC has filed a civil case against Liang Guo over fund misuse during his time at Blockchain Global’s ACX Exchange.
• Customer funds were mixed and used for other purposes without proper records, leading to the collapse of the exchange.
• Guo left Australia after travel orders ended and faces possible criminal charges linked to misuse of company funds.

Australia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), has filed a crypto lawsuit against Liang Allan Guo, former director of Blockchain Global. The case centers on Guo’s alleged failure to fulfill his duties during his time managing the now-defunct ACX exchange. ASIC claims he mishandled customer funds and failed to maintain proper financial records. These failures reportedly played a key role in the collapse of the crypto platform in late 2019.

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Australian regulator ASIC sues former Blockchain Global director Allan Guo for multiple breaches of directors' duties relating to ACX Exchange customer funds. Guo faces court as liquidators estimate over 20 million AUD owed to former customers. #crypto #ASIC #BlockchainGlobal… pic.twitter.com/tf8jJ7wBae

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At the time of the incident, Blockchain Global was overseeing the ACX Exchange, where users could not access their crypto. Due to many customer complaints, the company started liquidation in early 2022. An investigation revealed that customers’ deposits were moved to purchase crypto assets and then combined into a bigger pool instead of having them stored separately. As a result, tracking assets or the balance of an individual user became quite difficult.

ASIC started to investigate the company after court-appointed liquidators submitted a detailed report. The report found that Blockchain Global owed more than 58 million Australian dollars to its unsecured creditors. More than $22 million of the total amount came from the claims made by ex-ACX customers.

ASIC Crypto Lawsuit Centers on Customer Funds

The liquidator’s findings showed more serious issues. Funds from ACX customers were sent to another business that conducted arbitrage trades. Liquidator Andrew Yeo confirmed this business had close ties to Blockchain Global. He also stated that over $1.7 million CAD dollars were moved from a customer account and invested in public shares through a family trust connected to Guo.

In addition, the company failed to keep proper financial records. The company mixed customer funds with its own and used them for other purposes. This lack of transparency made it difficult to track where customer assets had gone. Yeo pointed out that the funds were not just mismanaged but also used outside the scope of what customers expected.

Guo also made statements about the handling of these funds that ASIC now claims were false or misleading. The suit claims that his behavior went against his duties as a director. As a result of these failures, the exchange shut down, leaving thousands of users who could not withdraw their digital assets.

Guo Left Australia Before Criminal Charges Were Considered

ASIC placed Guo under travel restraint orders in February last year during the ongoing investigation. These orders expired in September, after which Guo left Australia and has not returned. According to ASIC, it is reviewing whether Guo’s conduct may lead to criminal charges.

Although the crypto lawsuit remains the main focus, ASIC continues to investigate the broader issues linked to ACX’s failure. ASIC is pursuing an appeal over a decision about another crypto company, Block Earner, in a different case. The ongoing review demonstrates a change in how digital platforms are being monitored in Australia. ASIC is taking steps to verify that businesses dealing with customer assets are adhering to set financial laws. Meanwhile, Australia has introduced regulations that will affect crypto exchanges, custody services, and some brokerage firms handling cryptocurrencies.

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