Taiwan’s Well-known Asset Management Platform Steaker Files Lawsuit After Two Years of Suspension Due to FTX Impact
Recently, the founder Huang Weixuan and others have been sued under the Money Laundering Prevention Act and the Banking Act. Industry insiders and the community have different opinions on the grounds for the lawsuit, while Steaker firmly claims it operates legally. Chain News has exclusively obtained the indictment from Steaker, aiming to understand the reasons for the lawsuit from the prosecutor’s perspective.
Quick Overview of Key Points in Steaker’s Lawsuit
Providing high-yield investment plans for virtual currencies to attract unspecified public investment
The prosecution pointed out that since September 2019, Huang Weixuan and others set up the “Steaker” digital asset management platform through the company Siti Co., Ltd., launching virtual currency investment plans with annual interest rates ranging from 3.5% to 88%. They emphasized enticing conditions such as “capital preservation and profit” and “maximum loss is zero,” claiming that assets are held by CYBAVO and a SAFU security fund is in place.
This information was publicly disclosed on the platform, leading investors to believe it was true, and they subsequently purchased various plans primarily based on Tether (USDT), USDC, BUSD, DAI, Ethereum (ETH), and Bitcoin (BTC). According to investigations, from 2019 to the end of 2022, over 48 million USD, equivalent to approximately 1.48 billion TWD, flowed into the platform.
Funds not clearly managed, large amounts transferred to personal accounts of responsible persons
Investigators found that the virtual currencies transferred by investors into the platform’s wallet would be automatically transferred to a deposit wallet jointly controlled by Huang Weixuan, Xiu Minjie, and Pan Yiting.
Huang Weixuan subsequently instructed to transfer part of the assets into his personal sub-account on the FTX exchange for strategic trading, high-interest lending, or further transferring to multiple channels such as Steaker’s withdrawal wallet.
According to the indictment, Huang Weixuan’s team once transferred 360,000 USDC to the well-known decentralized lending platform AAVE. AAVE is an open blockchain application where users can freely lend and borrow virtual assets through the platform to earn interest or liquidity returns. The destination of these funds was not disclosed to investors and was not listed in the platform’s investment plans, which may violate information disclosure obligations and fund management principles.
Additionally, the prosecution discovered that the team had also lent some virtual assets to two corporate entities, namely QUANTREND TECHNOLOGY, INC. and Taiwan Valley Technology Co., Ltd., and signed virtual asset lending agreements with these two companies under the name of Seychelles-registered “Siti Technology Co., Ltd.”
When withdrawal demands increased, the platform would then allocate funds from exchanges or deposit wallets to meet the demands. The overall fund flow was complex and was even used to pay for personnel, rent, and daily operations, indicating a serious mixing of personal and company assets, violating relevant financial regulations.
Intermingling of accounts to disguise the source and destination of funds
The investigation also revealed that Huang Weixuan and Siti Co., Ltd. had accounts on the FTX and Binance exchanges, and owned multiple virtual wallets (such as WILSONHUANG.ETH), with funds flowing back and forth between them, suspected of deliberately creating breaks to cover the true flow of criminal proceeds, suspected of money laundering activities.
Investigators search and seize multiple digital assets and evidence; the entire case is being investigated according to the law
Taipei City Investigation Office conducted searches with court-issued search warrants, seizing multiple computers and digital assets, and lawfully seizing relevant properties, including virtual currencies, to trace criminal proceeds.
The prosecution emphasized that although the platform operated under the guise of “digital asset management,” it constituted illegal fundraising and money laundering, violating the Banking Act’s prohibition on unlicensed deposit-taking and fund business. The investigation has been completed, and Huang Weixuan along with several accomplices have been prosecuted according to the law.
Steaker’s Perspective on Charges of Illegal Fundraising: Accepting Stablecoins Also Counts as Receiving Deposits
In this criminal case, defendants Huang Weixuan, Xiu Minjie, Lu Tianxin, and Pan Yiting are accused by the prosecution of illegally absorbing funds from the public, constituting violations of the Banking Act and the Money Laundering Prevention Act.
According to court findings, they raised funds from an unspecified public under the guise of “loans,” “investments,” and “becoming shareholders,” promising returns significantly higher than the principal as dividends, interest, or other rewards. Such operations may appear to be ordinary investments, but they have already violated the Banking Act’s explicit prohibition on “receiving deposits.”
Article 29 and Article 29-1 of the Banking Act of the Republic of China clearly state that non-bank institutions are prohibited from engaging in deposit-taking business. The term “receiving deposits” is not limited to cash but also includes the flow of funds through virtual gaming tokens, virtual currencies, or other items or rights with monetary value that can be traded and converted into money in the market. Therefore, even if these defendants did not receive physical cash, their actions of fundraising through virtual assets still constitute illegal activity (previous case references: Supreme Court 110 Annual No. 3277, Taiwan High Court 109 Annual No. 59).
The prosecution pointed out that the total amount of funds absorbed by these defendants has exceeded 100 million TWD, and there was intent for joint criminal behavior and division of labor, meeting the legal requirements of “joint offenders.” Since a single act violates multiple charges, they should be punished severely according to Article 55 of the Criminal Code. The relevant actions not only violate the illegal business provisions of Article 125 of the Banking Act but also touch upon the provisions of Article 14 of the Money Laundering Prevention Act prior to amendments, constituting serious crimes.
Among them, Siti Co., Ltd. is also involved in the illegal operation of absorbing deposits due to Huang Weixuan being the responsible person, and fines should be imposed on the company itself based on Article 127-4 of the Banking Act.
As for the assets and properties seized in the case, the court believes they are all criminal proceeds and should be confiscated in accordance with Article 136-1 of the Banking Act and Article 38 of the Criminal Code; if confiscation is not possible, equivalent amounts should be further pursued.
Additionally, the prosecution also recognized that the defendants suspected of disseminating investment information to the public through the internet with three or more individuals were suspected of fraudulently obtaining property, and investigated in conjunction with Article 339-4 of the Criminal Code.
Overall, the indictment reveals not merely an investment dispute but rather an illegal fundraising act disguised under the pretext of investments, loans, and shareholders. Through the flexible application and interpretation of the Banking Act, judicial authorities aim to curb the spread of such underground fund schemes, maintaining financial order and the safety of public property.
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