Our weekly roundup of news from East Asia features the industry’s most important events.
Chinese billionaire arrested in US for $1 billion financial fraud
As per notification published Chinese billionaire Ho Wan Kwok (aka Miles Guo and more commonly known as Guo Wengui) was arrested by the US Department of Justice (DOJ) on March 15 on a total of twelve charges, including wire fraud, securities fraud and bank fraud. and money laundering. Among many items, the Justice Department alleges that Kwok/Guo “fraudulently obtained” more than $262 million from victims through the Himalayan Exchange cryptocurrency platform.
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.
“If someone loses money, I can say that I will compensate them 100%. I give you 100%. Whoever loses money, I’ll bear it.”
Guo launched both 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 reported that each HCN was worth 27 HDOs or $27 and had a total market value 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 bank accounts held by Himalaya Exchange and related entities. At the time of publication, the Himalaya Exchange social accounts and website appear to be still online and active.
In another incident, Guo allegedly sold $452 million of common stock in an initial public offering (IPO) to more than 5,500 investors for shares of GTV Media Group. The Ministry of Justice claims that in both cases the entrepreneur embezzled a substantial part of the investors’ funds and will request the forfeiture of the confiscated property. In 2021, the US Securities and Exchange Commission took enforcement action against three of his companies with unregistered ICOs and IPOs. At that time the company agreed to pay Fines of $486.6 million, prejudgment interest of $17.6 million, and civil penalties totaling $35 million.
The billionaire is reportedly a close friend of former White House chief strategist Steve Bannon. He rose to prominence in China through real estate and construction and fled the country in 2014 after receiving information about his imminent 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 Guo used to criticize the CCP were allegedly forged. An Interpol Red Notice for his arrest has reportedly been active since 2017.
If you want to defeat communism, buy my coin
For the Chinese billionaire, “taking down CCP” is a goal that neatly aligns with the promotion of cryptocurrencies. In 2020, Guo founded the “New Federal State of China” (NFSC) political movement with the stated goal of overthrowing the CCP alongside the non-profit organization Himalaya Supervisory, which is related to the aforementioned cryptocurrency exchange.
In addition to educating viewers about the evils of communism, Guo also used the official NFSC and Himalaya Supervisory brand to shill his followers on the alleged benefits of his HDO and HCN coins:
“Himalaya Coin crushes bitcoins with the snap of a finger if a certain country grants Himalaya Reserve or Himalaya Coin a license for visual banking and a virtual banking exchange.”
In another “lecture” dated shortly before his arrest Guo he explained to viewers that “the US and Communist China are fighting for the power to implement blockchain standards that will govern all digital currencies”, but the bottom line is that the NFSC will be the one to emerge victorious in the fight:
“Eventually, people will have to use digital US dollars, and then the US will be in charge of setting future blockchain standards. However, the US encountered a rival in the name of the CCP. So when these two tigers fight, we [the NFSC] end up victorious.”
Guo claims to have invested $100 million in the NFSC movement. However, the source of the funding 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 luxury apartment in Manhattan caught fire. It is unclear if the two incidents are related.
Do Kwon officially loses one highly publicized LUNC bet
In March 2022, CEO and co-founder of South Korea’s Terraform Labs Do Kwon accepted two bets from crypto traders GiganticRebirth (GCR) and Algod totaling $11 million, betting that the price of Terra Luna (LUNC) would not go below 92.4 and 88 dollars. per token, respectively until March 13, 2023. The result of the bets was a cash fund of 22 million dollars, which is in the custody of the blockchain personality Cobie.
At the price of LUNC dropped to almost zero in May 2022, as part of the $40 billion Terra Luna ecosystem collapse, Cobie cashed out bets and bought LUNC as a hedge in case its price recovered. However, Cobie’s collateral was reportedly lost when cryptocurrency exchange FTX filed for bankruptcy in November 2022, freezing more than one million lender assets and nine million user deposits. The current status of the funds remains unclear.
Since then, the US Securities and Exchange Commission loaded with Terraform Labs and Kwon with “defrauding 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 another $11 million from the bet weren’t enough, Kwon is also reportedly on the run from authorities in Serbia, a country without an extradition treaty with South Korea. Interpol issued a red warrant for Kwon in September 2022 at the request of South Korean prosecutors, charging him with fraud related to the Terra Luna crash. As of February 2023, South Korean prosecutors are also in Serbia looking for a blockchain manager.
Zhu Su’s Spiritual Journey through Bankruptcy and Islam
Compared to the precarious situation facing Do Kwon, Zhu Su and Kyle Davies, the two co-founders of now-defunct Singaporean hedge fund Three Arrows Capital (3AC), they seem to be doing pretty well. Despite be on the run from creditors totaling more than $10 billion, the two have yet to face any criminal charges for their role in the 3AC bankruptcy that toppled them and major counterparties in the centralized finance space, such as Voyager Digital and Genesis Global.
Liquidators say Davies and Su are located somewhere in Indonesia or the United Arab Emirates, where foreign court orders are said to be difficult to enforce. Currently, Davies actively shares his views on trending financial stories via Twitter, occasionally trying to gain sympathy for 3AC’s “frustration”. current bankruptcy proceedings.
Su is also active on Twitter, except his interests have turned away from the material world to the more sophisticated realms of philosophy, religion, and introspection. On March 15, Su quoted Prophet Muhammad (PBUH), the founder of Islam, as follows:
“The Messenger of Allah, peace and blessings be upon him, said: There is no mercy unless one errs, and there is no wisdom unless one has experience.”
Su previously made a similar reference to Islam on 27 November 2022 when he wrote that “Allah does not blame the soul except what is within its capacity”.
Interestingly, cryptocurrency and blockchain are currently the subject of intense controversy in Islamic circles. Some Islamic scholars have labeled all cryptocurrencies and blockchain-related activities as haram (forbidden), so they are prohibited under all circumstances. Others, such as Dubai’s Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, support the technology and want to encourage at least 5,000 blockchain and metaverse companies to move to the UAE by 2027.
