Australian Regulator Secures Interim Travel Ban for Ex-crypto Director at Collapsed Blockchain Global Owing $58M

The Australian securities watchdog secured a critical win with the federal court, barring Liang Guo, identified as formerly serving in the crypto firm Blockchain Global, which imploded while owing creditors $58m. 

The Australian Securities and Investments Commission’s (ASIC) devotion to fighting crypto0-based fraud yielded gains with Liang Guo banned from exiting Australia. The federal court secured the interim travel ban in a February 20 ruling as the regulator argued successfully that Guo posed a flight risk. 

ASIC attorney submitted before the federal court that Guo is of Chinese origin and should hand passports to the court. The session was held in the absence of the accused, who could not immediately respond to the ruling. 

Guo Co-accused Parties Linked to HyperVerse Scheme in US

The case arose when liquidators referred Guo alongside co-accused directors Ryan Xu and Sam Lee for breaching the Corporations Act. ASIC indicated it was still investigating the allegations. 

Guo’s co-accused feature in another crypto investigation scheme is identified as HyperVerse. The duo is accused of defrauding investors of US$ 1.89 billion. The investigation has yet to reveal Guo’s involvement in the HyperVerse fraud. 

Lee is identified as a Dubai resident charged in the US in January for running a fraudulent HyperVerse scheme. The US Securities and Exchange Commission (SEC) accused Lee, Xu, and Brenda Chunga of running a ‘pyramid and Ponzi scheme’ to unjustly enrich themselves. 

The complaint filed in the Maryland district court accuses Lee of conspiring to commit wire and securities fraud. The co-accused have entered into guilty plea admitting their wrongdoing and await sentencing.

Guo’s former colleagues at Blockchain Global had civil complaints in the US besides the charges against them for the unregistered sale of securities that breached the country’s Securities Act. 

Federal Court Imposes Six-Months Travel Ban

The Federal Court, in its judgement conveyed on Wednesday by Justice Button, granted the motion by ASIC to impose the interim ban that bars Guo from exiting Australia till August 20. The Justice labeled the allegations Guo faces severe, including transferring investor funds for personal enrichment. 

He echoed ASIC’s submission that Guo had transferred $2.6M from the bank account holding the investor funds during his directorship reign at Blockchain Global. A portion of the funds were utilized in the personal home loan account, and the rest were transferred to the current account. 

Guo Accused of Retaining Investors’ Assets

ASIC accuses Guo of retaining 23.11 Bitcoins, approximated at $1.8 million, despite the crypto assets constituting Blockchain Global’s property. The accused transferred the digital assets to his controlled wallet in December 2019. 

ASIC submitted that fellow directors at Blockchain Global left Australia, leaving behind Guo as the individual closely involved in the company’s affairs in the country. The regulator indicated that interviewing and examining Guo is critical to pursuing justice. The judgment cited the ASIC argument that it considered the investigation may result in referral to the Commonwealth Director of Public Prosecutions. 

The judgment cited the ASIC’s submission that it anticipated it would take 12 months to complete the investigations before furnishing the DPP with brief confidence.

Button reflected on the delay to the ASIC’s investigation that began on January 16 following the disclosure of the HyperVerse scheme. Justice Button admitted uncertainty of the delay though acknowledged that the investigation is ongoing and still in its onset. 

ASIC had conveyed a statement expressing fears when seeking the travel restrain orders that Guo could slip out of the country while it was conducting the investigations. 

Guo lacked the opportunity to comment on the ASIC’s application and basis for seeking the orders, considering that the session was held in their absence. 

The accused is yet to respond to inquiries regarding the allegations lodged against him and captured within the liquidator report referred to the ASIC.