According to a Sydney Herald story, an inquiry into the operations of the defunct cryptocurrency exchange ACX revealed that it utilized more than $20 million of user funds as financial assistance for its parent business Blockchain Global.
Having failed to be listed on the Australian Securities Market due to presenting misleading and false information regarding its investors and financial status, Blockchain Global created the ACX exchange in 2016, which is based in Australia.
Clients were able to deposit fiat currency and exchange crypto using the trading facilities supplied by ACX exchange. Nevertheless, it did not keep a thorough track of each user’s holdings and combined all of the customers’ cash into one account.
Customers’ withdrawals from the cryptocurrency exchange were suspended in October 2021 because the exchange had filed for bankruptcy since there is nearly $50 million owed to creditors.
The Supreme Court of Victoria is currently conducting investigations, which have revealed that ACX seized consumer deposits and mixed them with the funds of the company. It then took money out of the pool to use as funding for additional Blockchain Group-owned company ventures. According to testimony by Jin Chen, a previous CTO of Blockchain Global, the business had a terrible track record since it was unable to separate the individual bitcoin assets of individual users. Allan Guo, a co-founder of the company, told Chen to move Bitcoin (BTC) to other divisions of the enterprise, from the user funds pool, Chen continued.
Chen went on to say that “Allen instructed me to send 100 bitcoin to an employee at the time of Blockchain Global Ltd and I understood it was for a collateral purpose.”
The upshot was that the corporation lost money from the transactions while using more than $20 million of consumer Bitcoin (BTC) to finance its operations.
As it considers how to retrieve the money from clients, the court hearing will continue on October 27.