Crypto king’s passport taken away by court as criminal investigation underway

The Chinese director of Blockchain Global has been banned from leaving Australia while a criminal investigation looks into the $50m collapse of the firm.

Blockchain Globval started operating a cryptocurrency exchange platform, known as ACX Exchange in 2017.

The director of a collapsed Australian cryptocurrency firm has been banned from leaving Australia while the corporate watchdog investigates criminal allegations against him, after the company left investors almost $59m in the lurch.

The Australian Securities and Investments Commission is considering whether to lodge a brief of evidence about the matter with the commonwealth Director of Public Prosecutions after claiming a director of Blockchain Global, Liang — also known as Allan — Guo, transferred $2.6m worth of investor funds out of an account, some of which was moved to his personal home loan account and bank account.

The details were revealed in a Federal Court judgement handed down late last week, in which justice Catherine Button banned Mr Guo from leaving Australia until August 20 amid the allegations. Mr Guo, a Chinese citizen living in Melbourne, was also ordered to hand over his passport.

Justice Button made the orders off the back of an application brought by ASIC, and in the absence of Mr Guo who has not has not yet had the opportunity to respond to ASIC’s application.

ASIC is also investigating two other directors of Blockchain Global, Samuel Xue Lee and Zijang “Ryan” Xu over their roles in the collapse of the exchange.

Blockchain Global started operating a cryptocurrency exchange platform, known as ACX Exchange in 2017 where customers could buy, sell and store cryptocurrency.

About two years later, the platform collapsed and punters could not withdraw their funds.

Blockchain Global appointed voluntary administrators in October 2021, and in February 2022 liquidators were appointed.

It’s understood 151 investors have claimed they lost $58.7m in the scheme, and 11 other creditors — including related party claims from loans — have lost $35.8m in the collapse.

Justice Button said in her judgement the allegations made against Mr Guo, including that he transferred investor funds to buy shares in another company for the benefit of his own family, are “very serious”.

“(ASIC) deposes to the fact that other persons of interests, being other directors of Blockchain Global, left Australia soon after its collapse, making Mr Guo the only person closely involved with the affairs of Blockchain Global who remains in Australia,” she said.

“ASIC anticipates that interviewing or examining Mr Guo will be critical to ASIC pursuing the investigation, which it anticipates may culminate in the referral of a brief of evidence to the Commonwealth Director of Public Prosecutions.

“(An ASIC investigator) deposes in her affidavit to the particular conduct of Mr Guo which ASIC considers may have contravened … the Corporations Act, as well as … the Crimes Act 1958 (Vic).”

The collapse of Blockchain Global has been widely reported, but the corporate watchdog was yet to reveal its investigation into the collapsed exchange, let alone the possible criminal allegations to be made against Mr Guo.

As well, a separate lawsuit was launched in Victoria in 2022 with 94 traders claiming the company stole $10.3m in bitcoin.

According to Justice Button’s judgement, ASIC has stated that it appears on March 6, 2018, Mr Guo withdrew more than $330,000 from a Blockchain Global account to buy shares in First Growth Fund Limited “for the benefit of ACL Investment Australia Pty Limited, which is a trustee of the family trust associated with Mr Guo’s family.”

“ASIC also claimed that Mr Guo caused the transfer of $1.4m from an account associated with Blockchain Global to purchase further shares in First Growth Fund Limited for the benefit of Blockchain Global, but without recording that transaction in the accounts of Blockchain Global,” she said.

“ASIC has also noted that, during his directorship, Mr Guo transferred $2.6m out of a bank account holding investor funds, some of which was applied to his personal home loan account and his personal bank account.”

ASIC also claimed Mr Guo retained 23.11 bitcoins, worth about $1.8m, which were the property of Blockchain Global and transferred them into a cryptocurrency wallet controlled by Mr Guo on December 8, 2019.

The matter will return to court on March 12.