ASIC Sues Former Blockchain Global Director Over 58.6 Million Australian Dollar Collapse

Australia’s markets regulator has initiated legal proceedings against Liang “Allan” Guo, the former director of Blockchain Global. The Australian Securities and Investments Commission (ASIC) alleges that Guo breached his duties as a director, leading to the collapse of the company. The case is set to be heard in court, where Guo will face multiple allegations related to his conduct while serving on the board of Blockchain Global.

The allegations against Guo include making false and misleading statements about his dealings with ACX Exchange customer funds, failing to maintain proper books and records, and breaching his fiduciary duties. These breaches are said to have contributed to the financial difficulties that ultimately led to the liquidation of Blockchain Global. The regulator is seeking a court ruling on the definition of financial products in the context of cryptocurrency, which could have implications for the industry as a whole.

Blockchain Global operated the ACX Exchange from mid-2016 until December 2019, when it collapsed as customers could no longer withdraw their assets. During liquidator’s examinations in 2022, the courts were told that ACX exchange took the cash invested by its customers to buy crypto and mingled the funds into one pooled fund. The liquidators of Blockchain Global estimate that the company owed over 20 million Australian dollars in unsecured creditor claims to former customers of the ACX Exchange. In November 2023, liquidators reported that Blockchain Global had 58.6 million Australian dollars owed to unsecured creditors. Of that total, 22.7 million Australian dollars were unsecured creditor claims received from former customers of the crypto exchange.

ASIC began investigating Blockchain Global in January 2024 following the liquidators’ report. Guo was banned from leaving the country as the regulator investigated whether he committed any criminal offences, including transferring money from the collapsed exchange to pay his mortgage. Guo left Australia in September 2024 after travel restraint orders expired, and he hasn’t returned, it noted.

The legal action against Guo is part of a broader effort by ASIC to hold directors accountable for their actions and to ensure that they fulfill their obligations under the law. This case is significant as it marks one of the first instances where a regulator has taken legal action against a director of a cryptocurrency exchange for alleged breaches of duty. The outcome of this case could set a precedent for future regulatory actions in the cryptocurrency industry.

The case against Guo is not the first time ASIC has taken legal action against directors for breaches of duty. In a separate case, Justice Michael Lee issued a warning to company boards, stating that directors have obligations to fulfill their duties and cannot simply rely on the information provided to them. This warning underscores the importance of due diligence and accountability in corporate governance.

The legal action against Guo is part of a broader trend of increased regulatory scrutiny in the cryptocurrency industry. As the use of cryptocurrencies continues to grow, regulators are becoming more vigilant in ensuring that companies and individuals comply with the law. This case serves as a reminder that directors of cryptocurrency exchanges, like those in other industries, have a responsibility to act in the best interests of their companies and shareholders.

The outcome of this case will be closely watched by the legal and blockchain communities, as it could have significant implications for the future of the cryptocurrency industry. The case highlights the evolving risks and vulnerabilities within the cryptocurrency space and the need for increased regulatory oversight. As the industry continues to grow, it is likely that we will see more cases like this, as regulators seek to hold directors accountable for their actions and to ensure that the industry operates in a transparent and accountable manner.