Chinese billionaire’s $1B fraud charges, Kwon’s $11M bet, Zhu Su and Islam: Asia Express

Our weekly roundup of news from East Asia curates the industry’s most important developments. According to an announcement published by the U. S.

Department of Justice (DOJ) on Mar. 15, Chinese billonaire Ho Wan Kwok (aka 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 items, the DOJ alleges that Kwok/Guo “fraudulently obtained” more than $262 million from victims through cryptocurrency platform Himalayan Exchange.

The Himalaya Exchange included assets such as Himalaya Dollar (HDO), a purported stablecoin, and Himalaya Coin (HCN), a purported trading coin. According to the indictment, Guo told investors that HCN was 20% backed by gold and that he would personally compensate investors for “100%” of trading losses. Guo launched both HCN and HDO coins in an initial coin offering (ICO) around Nov.

1, 2021, when HCN was trading at around $0. 10 apiece. Two weeks later, the Himalaya Exchange website stated that each HCN was worth 27 HDO, or $27, and had a total market cap of $27 billion.

Between Sept. 2022 to Mar. 2023, U.

S. Authorities subsequently seized $634 million in Guo’s alleged fraud proceeds, including $278 million from bank accounts held by Himalaya Exchange and related entities. At the time of publication, social accounts and Himalaya Exchange’s website appears to be still online and active.

In another incident, Guo allegedly sold $452 million in common stock in an initial public offering (IPO) to over 5,500 investors for shares of GTV Media Group. The DOJ allege that in both incidents, the entreprenuer misappropriated a substantial portion of investors’ funds and will seek forfeiture for the seized assets. Back in 2021, the U.

S. Securities and Exchange Commission took enforcement action against three of his companies with unregistered ICOs and IPOs. At the time, the firms agreed to pay $486.

6 million in fines, prejudgment interest of $17. 6 million, and a civil penalty of $35 million combined. The billionaire is reportedly a close-friend of former White House chief strategist Steve Bannon.

Rising to prominence through real-estate and construction in China, he fled the country in 2014 after receiving information of his imminent arrest on charges of bribery, kidnapping, money laundering, fraud and rape. He has since lived in self-imposed exile in the U. S.

, sought asylum, and is a vocal critic of the Chinese Communist Party (CCP). However, several documents used by Guo to critique the CCP have been alleged to be forged. An Interpol red notice for his arrest has been reportedly active since 2017.

For the Chinese billionaire, “taking down the CCP” is a goal that neatly lines up with the promotion of crypto. In 2020, Guo founded the political movement “New Federal State of China” (NFSC) with the stated aim of overthrowing the CCP alongside the non-profit organization Himalaya Supervisory, which is related to the aforementioned cryptocurrency exchange. Aside from educating viewers on the evils of communism, Guo also used official NFSC and Himalaya Supervisory branding to shill his followers about the purported benefits of his HDO and HCN coins: In another “lecture” dated shortly before his arrest, Guo explained to viewers that the “U.

S. and Communist China are fighting over the power to establish blockchain standards that will govern all digital currencies,” but the major takeaway is that the NFSC will be the one to emerge victorious in the struggle: Guo claims to have invested $100 million into the NFSC movement. However, the source of funds is reportedly under investigation by the U.

S. Federal Bureau of Investigation. The Chinese billionaire was arrested on Mar.

15 in New York and shortly afterward, his luxury apartment in Manhattan caught fire. It is not clear if the two incidents are related. In March 2022, South Korean Terraform Labs CEO and co-founder Do Kwon accepted two bets from cryptocurrency traders GiganticRebirth (GCR) and Algod, totaling $11 million, wagering that the price of Terra Luna (LUNC) would not be lower than $92.

4 and $88 per token, respectively, by March 13, 2023. The bets resulted in a $22 million prize money pool, held in escrow by blockchain personality Cobie. After LUNC’s price plummeted to near-zero in May 2022 as part of the $40 billion Terra Luna ecosystem collapse, Cobie paid out the bets, purchasing LUNC as a hedge in case its price recovered.

However, Cobie’s hedge was reportedly lost when cryptocurrency exchange FTX filed for bankruptcy in Nov. 2022, freezing over one million creditors’ assets and nine million users’ deposits. The current status of the funds remains unclear.

The U. S. Securities and Exchange Commission has since charged Terraform Labs and Kwon with “defrauding investors in crypto schemes,” while the FBI and Department of Justice began investigating the company’s collapse in March 2023.

If losing his nearly entire net worth in the LUNC implosion and being out an additional $11 million from the bet wasn’t enough, Kwon is also reportedly on the run from authorities in Serbia, a country with no extradition agreement with South Korea. Interpol issued a red notice arrest warrant for Kwon in September 2022 at the request of South Korean prosecutors, accusing him of fraud related to Terra Luna’s downfall. South Korean prosecutors have also been in Serbia in search of the blockchain executive since Feb.

2023. Compared to the precarious situation faced by Do Kwon, Zhu Su, and Kyle Davies, both co-founders of the now-bankrupt Singaporean hedge fund Three Arrows Capital (3AC), appear to be doing quite well. Despite being on the run from creditors with a total claim of over $10 billion, the two have yet to face any criminal charges over their role in the 3AC bankruptcy that brought down themselves and major counterparties in the centralized finance space such as Voyager Digital and Genesis Global.

Liquidators claim that Davies and Su are located somewhere in Indonesia or United Arab Emirates, where foreign court orders are reportedly tough to enforce. Nowadays, Davies actively shares his views on trending financial stories via Twitter, while occasionally trying to solicit sympathy over the “frustrations” of 3AC’s current bankruptcy process . Su is also active on Twitter, except his interests have turned from the material world to the much more sophisticated realms of philosophy, religion and, introspection.

On Mar. 15, Su quoted Prophet Muhammud (PBUH), the founder of Islam, as follows: Su previously made a similar reference to Islam on Nov. 27, 2022, writing that “Allah does not charge a soul except that which is within its capacity.

” Interestingly enough cryptocurrency and blockchain is currently a matter of intense controversy within Islam circles. Some Islamic scholars have labeled all cryptocurrencies and blockchain-related activity as haram (forbidden), making them prohibited under all circumstances. Others, such as Dubai’s crown prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, support the technology and he wants to incentivize at least 5,000 blockchain and metaverse companies to relocate to the United Arab Emirates by 2027.

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