Crypto exchange users say they lost $9M in Bitcoin, execs sue each other to keep it

A stash of Bitcoin on an encrypted hard drive is at the centre of a legal battle between former employees of Australian crypto exchange ACX.

Bitcoin worth almost $9 million has been locked in a password-protected hard drive since Australian crypto exchange ACX went belly-up nearly two years ago.

Now, three of the company’s execs are waging a legal battle over the Bitcoin, despite 200 ACX users claiming it belongs to them.

As reported by the Australian Financial Review (AFR), more than AU$18.2 million ($13.5 million) in cash and crypto is yet to be distributed following ACX’s collapse in late 2019.

176 BTC makes up about two-thirds of those funds.

The hard drive containing the Bitcoin can’t be unlocked without signatures of two of the three ACX insiders.

One of those insiders is ex-ACX systems manager Jin Chen, who says he should receive the Bitcoin. Chen is attempting to sue Blockchain Global (GBL) — a crypto mining company run by ACX general manager Liang Guo — for the crypto.

GBL incubated ACX from its 2014 launch to December 2017.

Chen alleges ACX owed him the Bitcoin as part of a deed designed to smooth his exit from the company. He was to receive the crypto in exchange for handing ACX assets and login details to Guo, BGL, and the mining firm’s chief exec Sam Lee.

Simpler times: Blockchain Global marketing video from 2017 is unusually sappy.

The Bitcoin was kept safe in a multi-sig crypto wallet that required both Chen and Guo’s authorization to access.

Supposedly, the 176 BTC was be paid to Chen in three chunks. Chen says he only ever received one payout of 58.76 BTC ($3 million).

BGL tells a different story. According to the Melbourne-based firm, Chen was only given some of the Bitcoin because he only turned in some of the materials they’d agreed on.

According to BGL, Chen gave:

  • just one hard disk (without any password),
  • a crypto wallet with the 176 BTC in question,
  • and another 200 Bitcoin Cash (BCH), currently worth $134,000.

BGL reckons Chen still owes it 1,199 ETH ($4.5 million) and 555 BCH ($375,000), noted AFR.

Not only that, but it also wants Chen to return the $3 million in Bitcoin it originally paid, as well a AU$200,000 ($148,000) loan from 2017.

Interestingly, BGL chief Lee says that while his company was a major ACX backer, he at no point managed the crypto exchange. He claims to be a victim of the ACX’s collapse, and was owed AU$500,000 ($370,000).

Unfortunately for him, regulatory docs indicate otherwise. A filing made in 2017 — which all parties signed — reportedly states BGC “wholly owns and operates ACX.io.”

ACX, an Aussie crypto exchange exit scam?

Things have gone from bad to worse for both ACX and its confused users since it started shuttering two years ago.

Traders first got a bad feeling when the crypto exchange started freezing withdrawals in January 2020, citing a purported audit.

One month later, the country’s leading blockchain industry body ejected the firm’s operator BGL. Later in the year, Australia’s FinCEN equivalent AUSTRAC cancelled ACX’s digital currency registration.

Read more: [Victims of $3.6B crypto Ponzi still believe they’ll get their money back]

Australian police are now said to be investigating complaints about “a cryptocurrency platform,” likely ACX. AFR relayed that the local Financial Crime Squad had taken the case.

As that plays out, spurned ACX users must frustratingly watch as its execs fight over what they view as their Bitcoin — which has appreciated in value over 500% since ACX froze withdrawals.

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