Blockchain Global directors missing in $10.3m case over alleged cryptocurrency fraud

Two Blockchain Global directors can’t be found after allegedly defrauding funds from almost 100 investors on a cryptocurrency platform, a court has heard.

Cryptocurrency platform developer Blockchain Global allegedly stole $10.3m in traders’ funds. Picture: Anthony Kwan.

The directors of collapsed cryptocurrency developer Blockchain Global are nowhere to be found after 94 traders have sued the company claiming it stole $10.3m in bitcoin, a court has heard.

94 cryptocurrency traders have sued Blockchain Global (BGL) and three of its former directors, Liang Guo, Xi Samuel Li and Jin Chen in the Supreme Court of Victoria, claiming they “misappropriated” $10.3m in cryptocurrency they held on the ACX platform, controlled by BGL.

BGL collapsed last October, with administrators estimating $50m remains owing to investors.

In a court hearing on Friday, the investors’ lawyer, Christos Stathopoulos said the cryptocurrency traders wanted a judge to decide their case against BGL, Mr Guo and Mr Li without hearing their arguments because they could not be contacted and had not appeared in court.

Mr Chen had appeared in the case, Mr Stathopoulos said.

Mr Stathopoulos said he had visited the BGL headquarters in Melbourne to serve court documents on the company but the office was locked and all furniture was covered in black plastic.

Lawyers trying to serve documents found the BGL headquarters in Melbourne locked and furniture inside covered in plastic.

Supreme Court Justice Peter Riordan made a freezing order in September last year over a cryptocurrency wallet controlled by BGL containing 117 bitcoins, worth $6.6m .

The judge also ordered BGL to disclose all assets it held worldwide because the freezing order would “barely” cover the 94 investors’ claim.

BGL fought against having to disclose its worldwide assets and argued the freezing order would be enough to cover the claims but the judge said there was a “serious question” whether BGL had defrauded the users of its platform.

“(There is a) serious question as to whether or not (the traders) have been defrauded so in those circumstances it seems to me appropriate that your client should disclose what assets it does have,” said Justice Riordan.

ACX platform user Lance Abel, who brought the lawsuit, claimed he started to notice issues in withdrawing his funds from the platform in November 2019.

In January 2020, Mr Abel asked BGL to return all of his funds but he received no response, court documents continued.

When he tried to withdraw his funds from the ACX platform in January, Mr Abel claimed a message appeared saying an audit was being run and no funds could be withdrawn until after it had ended.

Mr Abel said he personally asked BGL director Wenyong Huang in February 2020 to return his funds but Mr Huang said he could not retrieve the money.

Mr Huang allegedly said his fellow BGL and ACX director Liang Guo was “mismanaging” the company.

BGL’s website said it had no claims over the cryptocurrency which traders invested and transferred on its ACX platform, which was meant to be held on trust for the users, court documents said.

Supreme Court Justice Richard Attiwill said on Friday he would decide whether to rule on the case without hearing from BGL and its directors at a later date.

Mr Chen has sued his fellow director Mr Guo in a separate case in the Supreme Court of Victoria, the judge said.

Two winding-up applications were lodged last year against Blockchain Global, which was behind the failed bid to list Bitcoin Group on the ASX in 2016, with the company placed in administration in October. Documents lodged with the Australian Securities and Investments Commission indicate creditors are owed amounts ranging from a few thousand to as high as $8.3m.

BGL has not responded to The Australian’s requests for comment.