Cryptocurrency exchange operator Blockchain Global has fallen into voluntary administration owing $21 million to creditors, in the midst of a legal battle that has seen almost $10 million in assets frozen.
Blockchain Global was once the operator of failed cryptocurrency trading platform ACX, which ceased operations without warning last year, reportedly leaving hundreds of customers out of pocket.
Administers were appointed on October 19, 2021, just weeks after the business was ordered by the Federal Court to disclose its assets.
Blockchain Global has been embroiled in a dispute with customers over 117 Bitcoins, currently valued at about $9.9 million, that are trapped on a hard drive due to a breach-of-contract dispute between one-time business partners Sam Lee, Allan Guo and Jin Chen.
In 2020, the exchange abruptly halted trading and stopped responding to customers’ requests to withdraw their currency. According to the Australian Financial Review, about 200 investors may have been affected.
In September this year, Supreme Court Justice Peter Riordan ordered five defendants, including Lee, Guo and Chen, plus Blockchain Global and ACX Tech, not to sell or in any way dispose of the coins.
A few days later, Justice Riordan ordered Blockchain Global to disclose its assets by September 30, a deadline it reportedly failed to meet.
The business has appointed Andrew Yeo and Innis Cull, partners at Pitcher Partners, as administrators.
Speaking to SmartCompany, Yeo cites various ongoing legal proceedings as the main reasons for the company entering administration — including one seeking to establish who in fact owned and operated the ACX platform at the time it stopped trading.
“The value of those claims significantly exceeded what appears to be the assets of the company,” he says.
A Report on Company Affairs and Property shows that the company also owes some $20.94 million to creditors, he confirms. However after meeting with creditors, he expects this could increase to close to $30 million.
“Our initial investigations are focused on identifying the various assets of the company, and the various competing claims to those assets,” Yeo adds.
Lee, who is currently Blockchain Global’s chief executive, told the Australian Financial Review he stepped down as a director in 2019, but retained ownership of the brand and was re-appointed as CEO in April 2020 “to deal with matters” after the company ceased trading.
“I abstained from all decision-making after my appointment as I didn’t have enough visibility to make informed decisions,” he said.
The decision to wind up the company was made by existing directors, he added, who felt it was “in the best interest of creditors and shareholders”.
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