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Conclusion of fraud case, Pan Yizhang and Wang Chenhuan, key executives of the exchange, sentenced to 20 years and 12 years in prison, respectively

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Conclusion of fraud case, Pan Yizhang and Wang Chenhuan, key executives of the exchange, sentenced to 20 years and 12 years in prison, respectively

The investigation into a virtual currency fraud case involving the founder and former CEO of a prominent exchange officially concluded on the 26th.

The Taichung District Prosecutors Office has indicted the founder of ACE Exchange on suspicion of fraud, with the virtual currency transaction amount involved exceeding three billion yuan.

Star Case Prosecutes 32 People, Seeks 20 Years in Prison

According to a news release from the Taipei District Prosecutors Office, a total of 3 large-scale searches were conducted, revealing that the entire case involved Lin Geng-hong, a habitual fraudster, who first approached ACE founder Pan Yi-chang, and then collaborated with lawyer Wang Chen-huan in a scam involving fraud and money laundering, totaling over 2.2 billion New Taiwan Dollars.

Additionally, the scale of money laundering assistance to the fraud ring exceeded 2 billion New Taiwan Dollars. After investigation by the Taipei District Prosecutors Office, all 32 suspects were prosecuted on the 26th, with core members Pan Yi-chang, Lin Geng-hong, Chen Jin-yang, Lin Ruo-chiao, and others facing a 20-year prison sentence.

Wang Chen-huan, on the other hand, faces a sentence of at least 12 years.

Taipei District Prosecutors Office Announcement

Direct Sales of Garbage Coins

The Taipei District Prosecutors Office pointed out that tokens including MOCT Magic Coin, CSO, FITC, NFTC, and BNAT had no practical application prospects, but under the division of criminal responsibilities among core members, they fraudulently obtained nearly 800 million New Taiwan Dollars:

  1. Writing white papers of virtual currencies with false content.

  2. Listed on exchanges such as Wang Pai and ProEx.

  3. Established IMBA direct sales team for promotion.

  4. Manipulated coin prices on exchanges.

Wang Chen-huan Hides Fugitives, Guides Cryptocurrency Development

Wang Chen-huan, knowing that Lin Geng-hong was a wanted fugitive in a previous case, provided his property on Zhongzheng Road in Xindian District, New Taipei City for Lin Geng-hong to evade investigation in June 2012.

Despite knowing that tokens like MOCT had no real value, Wang Chen-huan, in June 2012, acted as an "advisor" and taught Lin Geng-hong and others to modify the white paper content, presenting false information to make investors believe that the development team indeed existed.

Lin Geng-hong Directs Money Laundering, Hides Cash Flow

Lin Geng-hong directed subordinates to launder money:

  1. Cash proceeds ranging from several hundred thousand to tens of millions were transported in batches and hidden in various locations in Taipei and New Taipei City.

  2. Illegally obtained funds were used to purchase real estate in Yilan Luchih, operating expenses, and as one of the money laundering locations.

  3. 40.3 million New Taiwan Dollars were handed over to Wang Chen-huan, with 26 million used as capital injection for Wang Pai exchange.

Over 1200 Victims, Losses Nearly 800 Million New Taiwan Dollars

The Taipei District Prosecutors Office seized over 600 million New Taiwan Dollars in this case, including:

  • Over 180 million New Taiwan Dollars in cash

  • 20 Chinese Yuan equivalent to about 92,600 New Taiwan Dollars

  • 248 BNB

  • 43 BTC

  • 1,943,602 USDT

  • 2,300 ETH

The above cryptocurrencies were valued at over 400 million New Taiwan Dollars as of April 11, 2024, and items such as a Mercedes-Benz van, already liquidated for 1.71 million New Taiwan Dollars, and a Mercedes-Benz sedan.

Industry Self-Regulation Appears Ineffective

The Taipei District Prosecutors Office stated that at present, the regulation of cryptocurrencies still focuses on "anti-money laundering" and "guidelines," with the guidelines having limited binding force, relying solely on self-regulation by industry players, which is insufficient for investor protection.

Main suspect Wang Chen-huan even served as the deputy convener and legal affairs of the VASP Association preparatory group, highlighting the ineffectiveness of relying solely on industry self-regulation.

The Taiwan FSC lacks comprehensive regulation, with prosecutors criticizing: counseling specific industry players while letting secondary players and exchanges go unchecked.