Australia Detains Blockchain Global Director Amid Ongoing Corporate Misconduct Investigation

Australia

Australia's corporate regulator has restricted Ryan Xu, the director of Blockchain Global, from leaving the country as it investigates the company's failed crypto exchange. The investigation, initiated due to concerns over missing customer funds, aims to understand potential breaches of corporate and financial laws.

Key Takeaways

Ryan Xu of Blockchain Global is barred from leaving Australia during an investigation into the collapse of the ACX Exchange.
The Australian Securities and Investments Commission (ASIC) has been granted a travel restriction order by the Federal Court, lasting until December 20.
The investigation focuses on financial mismanagement leading to substantial losses for investors.
ASIC is intensifying regulatory oversight of the crypto sector to restore credibility after several collapse incidents.

Investigation Into Blockchain Global’s Failed Exchange and Missing Funds

The Australian Securities and Investments Commission (ASIC) has placed a travel ban on Ryan Xu, also known as Zijing Xu, as it looks into the collapse of the ACX Exchange, a cryptocurrency platform previously operated by Blockchain Global. The exchange went under in late 2019 after users reported significant issues accessing their funds.

Following Blockchain Global's entry into liquidation in February 2022, liquidators revealed to ASIC that the company owed approximately A$58 million (about $37.3 million) to unsecured creditors as of October 2023. In early 2024, ASIC officially launched its investigation into Blockchain Global and its directors.

ASIC raised concerns that Xu might leave Australia while the investigation is still active, prompting the initial travel restrictions imposed on October 20. The court proceedings will continue on October 30, allowing both ASIC and Xu to present their sides of the case.

ASIC’s Efforts to Address Troubled Crypto Firms and Restore Market Trust

This case represents a broader initiative by Australian authorities to enhance regulation and oversight of collapsing crypto businesses while attempting to recover lost funds for investors. ASIC has previously taken action against multiple digital asset companies that faced difficulties during the downturn from 2019 to 2022.

Blockchain Global was once a significant entity in Australia’s blockchain industry, managing various crypto ventures and acting as a link between traditional finance and evolving digital markets. However, its downfall has left creditors and customers grappling with potential financial losses of millions.

Court Order Ensures Xu Remains Available for Ongoing Investigations

According to court documents, ASIC's investigation is scrutinizing whether any directors of Blockchain Global violated corporate or financial regulations in their management of customer funds and the company's solvency.

Xu, a co-founder of Blockchain Global, has not faced any criminal charges at this time. The current court order is a civil precaution to ensure he is available throughout the investigation process. The Federal Court will reevaluate the travel restriction on October 30, where both ASIC and Xu's legal representatives will be able to argue their cases.