The Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings in the Federal Court against Liang “Allan” Guo, a former director of Blockchain Global Ltd (in liquidation), in connection with the collapse of the ACX cryptocurrency exchange, which we wrote about in Feb 2020 when the exchange mysteriously changed the name of the operating company shortly before customers were unable to make withdrawals.
According to ASIC’s press release, the regulator alleges Mr Guo breached his duties as a director by misusing customer funds, failing to maintain proper records, and making misleading statements regarding the company’s operations. The charges come in the wake of Blockchain Global’s spectacular collapse in late 2019, when users of the ACX Exchange were abruptly unable to withdraw funds or crypto assets.
Blockchain Global was placed into external administration in 2022 following significant governance concerns and other missteps, including the refusal of a financial services licence and a halted IPO bid in 2017. Liquidator reports filed in October 2023 revealed that over AUD$58 million was owed to unsecured creditors, more than AUD$22 million of which was attributed to ACX customers. Investigations also uncovered that customer funds were co-mingled with company money and funneled into related entities, drawing parallels with other high-profile exchange failures.
ASIC’s investigation formally commenced in January 2024, culminating in interim travel restrictions on Guo. However, Guo departed Australia in September 2024, just weeks after the orders expired, and has not returned since.
Compounding concerns are Guo’s claims to liquidators that private wallet credentials to millions in crypto were lost due to a laptop theft in China, an incident for which no police report was ever lodged.
The collapse has also spawned new case law confirming the court’s powers to order freezing orders in respect of cryptocurrency and that bitcoin may be treated as property and is capable of being held on trust.
These proceedings mark a significant step in ASIC’s pursuit of accountability in one of Australia’s first and most notable crypto exchange collapses. The broader Blockchain Global saga continues to unfold, with co-director Sam Lee also facing legal scrutiny overseas for his alleged role in unrelated global investment schemes.
ASIC’s decision to pursue director’s duty breaches shows the broad tools which the regulator already has in hand to target alleged misconduct in the cryptocurrency sector notwithstanding that Blockchain Global was not an AFSL holder.
While the legal action demonstrates ASIC’s willingness to enforce corporate compliance in the sector, the fact that Guo has already left the jurisdiction suggests that any judgment in the case will likely be of symbolic value rather than resulting in returns for creditors of the defunct exchange, highlighting that swift action is needed by regulators if justice is to be done.
