An investigation into the activities of failed cryptocurrency exchange ACX revealed that it used more than $20 million in customer funds to finance its parent company, Blockchain Global. The Sydney Herald reports.
Australia-based Blockchain Global later launched the ACX exchange in 2016. We’re screwed Listing on the Australian Securities Exchange for submitting inaccurate and misleading information about investors and financial condition.
ACX exchange provided trading services for customers to deposit fiat currency and trade cryptocurrencies. However, he pooled all the client’s funds into one account and could not keep a detailed record of each client’s holdings.
In October 2021, the cryptocurrency exchange went bankrupt and owed up to $50 million to its creditors, freezing customer withdrawals.
An ongoing investigation by the Supreme Court of Victoria has revealed that ACX took money deposited by its customers and mixed it with the company’s funds. We then made withdrawals from the pool to fund other business activities owned by the blockchain group.
Former Blockchain Global CTO Jin Chen testified that the company’s track record was poor because it could not distinguish between the bitcoins held by each customer.
Chen added that he was instructed by the company’s co-founder, Alan Guo, to move bitcoin from the customer’s money pool to other parts of the business.
“I was instructed by Allen to send 100 bitcoins to an employee of Blockchain Global, Inc., and I understood that it was for collateral purposes,” Chen said.
As a result, the company used over $20 million in customer Bitcoin to fund transactions, and customers suffered losses.
A court hearing is scheduled to continue on October 27 to determine how to recover the funds and get customers back on track.