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Australian court procedures are shedding light on Sam Lee’s first cryptocurrency frauds as he prepares to deceive customers with his new StableDAO Ponzi scheme.

I should note that Blockchain Global was a platform for cloud mining. Thus, it has a different economic strategy than Lee’s many Hyper* Ponzi scams and StableDAO.

What transpired behind the scenes with Blockchain Global is important.

We already know that co-conspirators Lee (also known as Samuel Lee, Xue Lee) and Ryan Xu formed Blockchain Global (aka Zijing Xu).

Initially known as Bitcoin Group, Blockchain Global was a bitcoin exchange and mining company.

Bitcoin Group changed its name to Blockchain Global in 2016. Blockchain Global split off the cryptocurrency exchange ACX in 2017.

In 2020, Blockchain Global and ACX both failed. Later on, in the same year, Lee and Xu escaped to Dubai.

Liquidators’ claims put the losses at Blockchain Global and ACX at $48.9 million.

It is hardly a coincidence that Xu and Lee ended up in Dubai since liquidators and perhaps police authorities were looking for them. The lawless emirate is well known for hiding con artists from the law.

The Victorian Supreme Court was impacted earlier this week by the bankruptcy of Blockchain Global and ACX. And as a result, we now know more about Lee’s scamming methods.

Inaccurate record keeping, mixing invested monies with other funds, stealing investor cash for personal gain, and finally gambling away invested assets.

The Sydney Morning Herald’s Sarah Danckert has been reporting on the situation;

On Wednesday, the court heard testimony about how Blockchain Global’s ACX exchange took the money its customers invested to trade cryptocurrencies and combined the funds into one pooled fund, a practice that is against client money reporting regulations for registered stockbrokers and trading firms but not for the largely unregulated cryptocurrency market.

On Wednesday, Blockchain Global’s chief technology officer, Jin Chen, was questioned by an attorney representing the liquidator Andrew Silver. Jin Chen said that the business retained few records of each customer’s transactions and assets.

The invested money was mixed up with the creator of Blockchain Global’s cash, a loan taken out against the customer balances of ACX (which the clients were unaware of), and alleged trading earnings.

In addition, Chen said before the court that co-founder of Blockchain Allan Guo, who at various points served as the organization’s chief operating officer and chief investment officer, gave him instructions to move bitcoin from the pool of client assets to other divisions of the company.

Other expenditures made using customer money were:

investing in a cannabis-themed shitcoin, purchasing shares of a Canadian firm, funding the bank accounts of Blockchain Global’s founder and personnel, and clearing their mortgages.

Again, Blockchain Global and ACX clients were not made aware of any of this.

Customers of Blockchain Global were assured that their funds would be held in trust while they transacted on the renowned ACX exchange operated by Blockchain.

Lee and Xu set up bank accounts in the names of staff members whose families had no connection to the company to escape regulatory notice.

Despite having thousands of users and being a successful exchange, the court heard that Blockchain Global continued getting “debunked” by different banks, a practice in which a bank discontinues doing business with a client because that customer works in the cryptocurrency sector.

To streamline its banking procedure, Blockchain Global created businesses for Guo’s mother and later mother-in-names. laws These firms were utilized to open bank accounts in the group’s name.

Guo also testified before the court that Blockchain Global created a different business in his then-name wife’s to secure an Austrac registration.

The COO and CIO of Blockchain Global were Allan Guo, also known as Liang Guo. In Australia, he and CTO Jin Chen are the ones left holding the bag.

Although Blockchain Global is still under investigation, Supreme Court proceedings imply that $48.9 million in damages is a very modest estimate.

Former business head investment officer Allan Guo said the transfers of customer monies were sizable when being questioned by an attorney for liquidators Andrew Silver.

Silver questioned Guo, “What would you say if I told you that hundreds of millions of dollars had been removed in this manner from gateway accounts and then invested into other exchanges? Would it have been in the hundreds of millions?

“Sure,” Guo retorted.

You would be stupid to believe that this wasn’t exactly how Xu and Lee’s Ponzi schemes, HyperCash, HyperCapital, HyperFund, and Hyperverse, were operated.

And, more importantly in light of recent events, how Lee will manage StableDAO

The phrase “prime bank capital protection by Citibank” is one of the main selling factors for StableDAO.

I can assure you that “StableDAO” or Sam Lee isn’t revealed, assuming StableDAO has any interactions with CitiBank at all.

It is hard to estimate the entire number of victims who have lost money since HyperCash because Lee and Xu haven’t been caught yet (Xu hasn’t been spotted in public since late 2021).

But given how massive HyperFund became, I can estimate with some degree of certainty that customer losses are likely to total well over a billion. And the majority of it is thought to come from US-based investors.

Lee is currently attempting to repeat the process with StableDAO.

Lee and his accomplices, early investors, and top recruiters take your money when you invest in STBL tokens.

I’m not sure what will happen with the Blockchain Global proceedings given that Australian authorities have no more influence with Dubai’s corrupt officials than US authorities have.

We’ll let you know about any important developments.

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