Australia’s Securities Watchdog Charges Former CEO of Defunct Crypto Exchange

The Australian Securities and Investments Commission (ASIC) has charged the former CEO of the now-defunct cryptocurrency exchange Mine Digital, Grant Colthup, with defrauding an investor of $1.47 million. This case underscores the ongoing challenges and risks associated with the cryptocurrency market.

Details of the Alleged Fraud

Colthup faces one count of fraud after a customer of Mine Digital did not receive the Bitcoin they paid 2.2 million Australian dollars (approximately $1.47 million) for in July 2022. Mine Digital, which operated under ACCE Australia Pty Ltd, provided trading services from May 2019 until its collapse in September 2022. Since then, creditors have been seeking $16 million in claims.

According to ASIC’s complaint, the customer expected to receive Bitcoin in return for their payment. However, Colthup allegedly used the funds to cover his company’s liabilities or purchase other cryptocurrencies, or possibly both.

Previous Allegations and Investigations

Mine Digital has faced multiple allegations over the years. Following its collapse, an investigation by the Australian Financial Review revealed significant discrepancies with its assets under management. The firm reportedly had only $20,000 in assets, despite creditors claiming $16 million in losses.

In January 2023, ACCE’s court-appointed liquidator also sued Colthup, seeking compensation for the company’s creditors. Colthup has been charged under section 408C of Queensland’s Criminal Code 1899 and could face up to 20 years in prison. He is scheduled to appear in court on December 16, 2024.

ASIC’s Broader Legal Actions

This case is part of ASIC’s broader efforts to address issues within the cryptocurrency sector. In April 2023, the regulator initiated civil proceedings against NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd. These companies were accused of misleading around 450 investors into investing in blockchain mining packages through self-managed superannuation funds, resulting in losses exceeding 160 million AUD.

ASIC has also launched a nationwide crackdown on cryptocurrency scams. This initiative followed criticism from Australia’s minister for financial services in January, who pointed out ASIC’s failure to warn locals about a $1.3 billion crypto scam.

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