Collapsed Australian Crypto Exchange ACX Allegedly Used Customer Funds to Run Business

The accusation was made by the company's liquidators in court.

Oct 21, 2022 at 1:38 p.m. UTC

Updated Oct 21, 2022 at 3:05 p.m. UTC

Amitoj Singh is CoinDesk's regulatory reporter covering India. He holds BTC and ETH below CoinDesk's disclosure threshold of $1,000.

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Blockchain Capital – which operated the ACX crypto exchange that collapsed last year – used customer deposits to fund another part of its business instead of keeping the money in reserve, according to a Sydney Morning Herald report on a court hearing that involved looking into the findings of the exchange's liquidators.

Former Chief Technology Officer Jin Chen, who left the company in 2018 and is not accused of any wrongdoing, told liquidators he was instructed by Allan Guo, Blockchain Global's co-founder, to transfer bitcoin (BTC) from customer accounts to other parts of the business. "I understood it was for a collateral purpose," Chen testified.
In other signs of poor controls. the exchange allegedly mingled customer funds into a single pool. "There’s no way of identifying that this bitcoin was owned by Customer A and this bitcoin is owned by Customer B?" Chen was asked. "Yes," he replied.
The revelations were made to the Supreme Court of Victoria on Wednesday during the public liquidator’s examinations into the group.
Blockchain Global, the company behind the exchange, collapsed in October, owing creditors $50 million. That included hundreds of Australian account holders who were unable to get their money after the exchange blocked withdrawals. Investigations into the disappearance of millions of dollars deposited by customers are ongoing.

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