Our weekly roundup of East Asia news selects the most important developments in the industry.
Chinese Billionaire Arrested in US for Billion-Dollar Financial Fraud
According to an announcement published by the US Department of Justice (DOJ) on March 15, Chinese billionaire Ho Wan Kwok (also known as Miles Guo and more commonly as Guo Wengui), has been arrested on a total of twelve charges, including wire fraud, securities fraud, bank fraud. and money laundering. Among many elements, the Department of Justice alleges that Kwok/Guo "fraudulently obtained" more than $262 million from victims through the Himalayan Exchange cryptocurrency platform.
Himalaya Exchange included assets such as the Himalaya Dollar (HDO), an alleged stablecoin, and Himalaya Coin (HCN), an alleged trading currency. According to the indictment, Guo told investors that HCN was backed 20% by gold and that he would personally compensate investors for "100%" of trading losses.
“If someone loses money, I can say that I will make it up to 100%. I give you 100%. Whoever loses money, I will bear it."
Guo launched the HCN and HDO coins in an initial coin offering (ICO) around November 1, 2021, when HCN was trading at around $0.10 each. Two weeks later, the Himalaya Exchange website stated that each HCN was worth 27 HDOs, or $27, and had a total market capitalization of $27 billion.
Between September 2022 and March 2023, US authorities subsequently seized $634 million in Guo's alleged fraud proceeds, including $278 million from Himalaya Exchange bank accounts and related entities. At press time, Himalaya Exchange's social accounts and website appear to still be online and active.
In a separate incident, Guo allegedly sold $452 million worth of common stock in an initial public offering (IPO) to more than 5,500 investors for GTV Media Group shares. The Justice Department alleges that in both incidents, the businessman misappropriated a substantial portion of investor funds and will seek forfeiture of the seized assets. In 2021, the US Securities and Exchange Commission took enforcement action against three of its companies with unregistered ICOs and IPOs. At that time, the companies agreed to pay $486.6 million in penalties, $17.6 million pre-judgment interest, and a combined $35 million civil penalty.
The billionaire is reportedly close friends with former White House chief strategist Steve Bannon. He rose to fame through real estate and construction in China, fleeing the country in 2014 after receiving information of his impending arrest on charges of bribery, kidnapping, money laundering, fraud and rape. Since then, he has lived in self-imposed exile in the US, applied for asylum, and is a vocal critic of the Chinese Communist Party (CCP). However, several documents used by Guo to criticize the CCP are alleged to have been forged. An Interpol red notice for his arrest has reportedly been active since 2017.
To defeat communism buy my coin
For the Chinese billionaire, "defeating the CCP" is a goal that aligns perfectly with promoting cryptocurrency. In 2020, Guo founded the “New Federal State of China” (NFSC) political movement with the stated goal of overthrowing the CCP along with the non-profit organization Himalaya Supervisory, which is related to the aforementioned cryptocurrency exchange.
In addition to educating viewers on the evils of communism, Guo also used the official NFSC and Himalaya Supervisory mark to accomplice his followers about the alleged benefits of his HDO and HCN coins:
“Himalaya Coin will crush Bitcoin in the blink of an eye if a certain country grants Himalaya Reserve or Himalaya Coin a visual banking license and a virtual banking exchange.”
In another "lecture" dated shortly before his arrest, Guo explained viewers that “the US and communist China are fighting for the power to set blockchain standards that will govern all digital currencies”, but the main takeaway is that the NFSC will be the one to win the fight:
“In the end, people will have to use digital US dollars, and then the US will be in charge of setting the future blockchain standards. However, the United States has encountered a rival called the CCP. So when these two tigers are fighting, we [the NFSC] will end up being the winner.”
Guo claims to have invested $100 million in the NFSC movement. However, the source of the funds is reportedly being investigated by the US Federal Bureau of Investigation. The Chinese billionaire was arrested on March 15 in New York and shortly after, his luxurious Manhattan apartment caught fire. . It is not clear if the two incidents are related.
Do Kwon officially loses a highly publicized LUNC bet
In March 2022, the CEO and co-founder of South Korea's Terraform Labs, Do Kwon, accepted two bets from cryptocurrency traders GiganticRebirth (GCR) and Algod, totaling $11 million, betting that the price of Terra Luna (LUNC) would be no less than $92.4 and $88 per token, respectively, by March 13, 2023. The bets resulted in a cash prize of $22 million, held on escrow by blockchain personality Cobie.
After LUNC price plummeted to almost zero in May 2022, as part of the collapse of the $40 billion Terra Luna ecosystem, Cobie called off the bets and bought LUNC as a hedge in case its price recovered. However, the Cobie cover was reportedly lost when cryptocurrency exchange FTX filed for bankruptcy in November 2022, freezing more than one million creditor assets and nine million user deposits. The current status of the funds remains unclear.
Since then, the US Securities and Exchange Commission. accused Terraform Labs and Kwon with "ripping off investors in crypto schemes," while the FBI and Justice Department began investigating the company's collapse in March 2023.
If losing almost all of his net worth in the LUNC implosion and losing an additional $11 million from the bet wasn't enough, Kwon is also reportedly on the run from authorities in Serbia, a country that doesn't have an extradition deal with Korea. South. Interpol issued a red notice arrest warrant for Kwon in September 2022 at the request of South Korean prosecutors, charging him with fraud related to the Terra Luna fall. South Korean prosecutors have also been in Serbia looking for the blockchain executive since February 2023.
Zhu Su's spiritual journey through bankruptcy and Islam
Compared to the precarious situation facing Do Kwon, Zhu Su and Kyle Davies, both co-founders of the now-bankrupt Singapore hedge fund Three Arrows Capital (3AC) appear to be doing pretty well. Although being on the run of creditors with a total claim of more than $10 billion, the two have yet to face any criminal charges for their role in the bankruptcy of 3AC that led to themselves and major counterparties in the centralized finance space like Voyager. Digital and Genesis Global.
The liquidators claim that Davies and Su are located somewhere in Indonesia or the United Arab Emirates, where foreign court orders are reportedly difficult to enforce. Today, Davies actively shares his views on trendy financial stories via Twitter, while occasionally trying to solicit sympathy for 3AC's "frustrations". current bankruptcy proceedings.
Su is also active on Twitter, except his interests have moved from the material world to the much more sophisticated realms of philosophy, religion, and introspection. On March 15, Su quoted the Prophet Muhammud (PBUH), the founder of Islam, as follows:
"The Messenger of Allah, may peace and blessings be upon him, said: There is no leniency unless one has made a mistake, and there is no wisdom unless one has experience."
Su previously made a similar reference to Islam on November 27, 2022, writing that "Allah does not charge a soul except what is within his ability."
Interestingly, cryptocurrency and the blockchain are currently a topic of intense controversy within Islamic circles. Some Islamic scholars have labeled all cryptocurrency and blockchain-related activity haram (forbidden), making it prohibited in all circumstances. Others, like the Crown Prince of Dubai, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, support the technology and want to incentivize at least 5,000 blockchain and metaverse companies to relocate to the United Arab Emirates by 2027.
