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The Australian Securities and Investments Commission (ASIC) has initiated civil proceedings against Liang “Allan” Guo, a former director of Blockchain Global, over alleged breaches of directors’ duties tied to the collapse of the ACX Exchange.

Allegations Against Guo

ASIC alleges that Guo engaged in the mismanagement of customer funds while failing to maintain proper financial records during his tenure at Blockchain Global, the now-liquidated operator of ACX Exchange. The civil penalty proceedings have been filed in the Federal Court.

According to ASIC, Guo made false and misleading statements regarding the handling of ACX customer assets. Additionally, he is accused of neglecting his responsibilities as a director by not ensuring the company maintained adequate financial documentation.

The Collapse of ACX Exchange

ACX Exchange, operated by Blockchain Global from 2016 to 2019, collapsed in late 2019, leaving users unable to withdraw their funds. Subsequent investigations revealed that customer deposits were misused, with funds being used to purchase cryptocurrency and commingled into a single pooled account instead of being kept in segregated accounts.

In February 2022, Blockchain Global was placed into liquidation. Court proceedings that followed estimated that the company owed more than 58 million Australian dollars to unsecured creditors. Out of this amount, over 22 million Australian dollars were claimed by former ACX customers.

ASIC’s Investigation and Legal Actions

ASIC began its investigation into Blockchain Global in January 2024, following a detailed report submitted by court-appointed liquidators in November 2023. The report highlighted significant financial mismanagement and potential misconduct.

As part of the investigation, Guo was placed under interim travel restraint orders starting February 2024. However, he left Australia in September after the expiration of these orders and has not returned since. ASIC has confirmed that it is considering potential criminal charges against Guo, including allegations that company funds were used for personal expenses, such as mortgage payments.

Regulatory Trends in Australia’s Crypto Industry

ASIC’s actions against Guo are part of a broader push for greater regulatory oversight within Australia’s cryptocurrency sector. In March 2024, the Australian Treasury proposed new licensing requirements for digital asset platforms that handle customer funds. These proposals aim to align cryptocurrency platforms with traditional financial services regulations. Key requirements include:

  • Redemption safeguards for customer funds.
  • Increased transparency regarding token listings.
  • Stricter obligations for exchanges, custodians, and stablecoin issuers.

Additionally, in April 2024, AUSTRAC, Australia’s financial intelligence agency, issued warnings about inactive crypto exchanges still listed on its register. The agency expressed concerns that such platforms could be exploited for illicit activities, including money laundering and fraud.

Key Takeaways for Crypto Investors

The collapse of ACX Exchange underscores the importance of due diligence when choosing cryptocurrency platforms for trading or investment. To safeguard your assets, consider the following tips:

  • Research the platform’s reputation: Look for reviews and past regulatory issues.
  • Check for proper licensing: Ensure the platform complies with local financial regulations.
  • Prioritize security: Use exchanges with strong security protocols and segregated accounts for customer funds.

As regulatory frameworks evolve, investors should stay informed about changes in compliance requirements to make well-informed decisions while navigating the cryptocurrency market.

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