The Australian Securities and Investments Commission (ASIC) has taken legal action against Liang Allan Guo, a former director of Blockchain Global, for alleged breaches of directors’ duties in relation to the collapse of ACX Exchange. The regulator has initiated civil penalty proceedings against Guo, accusing him of misconduct and mismanagement that led to the loss of customer funds on the crypto exchange platform.
ACX Exchange, operated by Blockchain Global, allowed users to trade digital currencies. However, in late 2019, customers were unable to access their funds on the exchange, resulting in its collapse. Liquidators estimate that Blockchain Global owes over A$20 million to ACX customers in unsecured creditor claims.
ASIC’s allegations against Guo revolve around his handling of customer funds at ACX Exchange and his failure to maintain proper records. A report by liquidator Andrew Yeo from Pitcher Partners highlighted potential breaches of the Corporations Act by Guo, prompting ASIC to launch an investigation in January 2024.
The report revealed that as of October 2023, Blockchain Global had A$58 million owing to unsecured creditors. Guo was prevented from leaving the country in February 2024, but he absconded in September after travel restrictions were lifted and has not returned to Australia since.
In a previous media report, Yeo disclosed that customer funds were being diverted to a related business specializing in arbitrage trading. Guo allegedly transferred over $1.7 million from an account holding customer funds to invest in publicly listed shares, under his family trust for the benefit of Blockchain Global. These funds were commingled with company funds and used for various purposes, according to the liquidator.
The legal action taken by ASIC against Guo underscores the importance of upholding directors’ duties and responsibilities in managing company affairs. The collapse of ACX Exchange has raised concerns about the protection of customer funds in the cryptocurrency industry, prompting regulatory scrutiny and legal action to hold accountable those responsible for the mismanagement of funds.
The case serves as a cautionary tale for directors and executives in the blockchain and cryptocurrency sector, highlighting the potential consequences of breaching fiduciary duties and failing to act in the best interests of stakeholders. ASIC’s lawsuit against Guo sends a strong message that regulatory authorities will not tolerate misconduct and negligence in the handling of customer funds, and will take decisive action to protect investors and uphold the integrity of the financial system.