Taipei, Taiwan— A complex scandal of cryptocurrency has come to light in Taiwan, where law enforcement has filed severe charges against four senior figures of Steaker, a digital asset platform. The case has now been turned over to the Taipei District Prosecutors’ Office after it was discovered that the company supposedly defrauded investors of millions of dollars by marketing crypto investment plans that had not received regulatory approval, in clear contravention of local financial laws.
Informing the Media of the Incident
Current news from the Justice Department indicates that amidst other businesses involved in similar unethical practices, Steaker came to attention due to its work in Taiwan, Hong Kong, and Singapore. Huang Weixuan, Steaker’s founder, and his other three partners will be put on trial as part of enforcing criminal liability—a legal mechanism aimed at curbing executive overreach in large corporations targeting malicious prosecution and excessive executive discretion, the so-called ‘CEO’ mindset.
Taiwan has recently enforced tougher regulations on cryptocurrency due to the rise in online scams. This case further escalates the situation for Taiwan as a notable player in the crypto game, with only a few crypto exchanges operational in the region due to the island’s investor-unfriendly business environment.
Allegations of Unauthorised Investment Activities
As per reports, in 2019 Steaker launched a number of self-advertised investment programmes, including one that guaranteed an unprecedented 88% annual return. Steaker marketed these alluring investment opportunities in popular cryptocurrencies like Bitcoin, Ethereum, and Tether, pitching them as safe, low-risk investments. Allegedly, these investments were backed by a securities protection fund set up in partnership with a cybersecurity company. Nonetheless, the regulators argue that the business model incorporated in these investment schemes bore a striking resemblance to the taking of deposits, which is highly controlled under Taiwanese law.
Funds Claim to Have Been Transferred to the Defunct FTX Exchange
To make these serious allegations even more serious, investigators allege that the funds raised from investors were subsequently routed to the now-defunct FTX crypto exchange and loaded in wallets controlled by Steaker’s founder, Huang Weixuan. It is alleged that these funds were exposed to multiple trading activities, including lending and arbitrage, with the intention of increasing the capital base of Steaker and profits for its investors. However, when the infamous FTX collapsed in November 2022, the assets stranded on the exchange were completely liquidated, leaving Steaker with no means to fulfil its financial liabilities towards its investors.
Concerns of Fund Management Responsibility
Adding to the complexity of the situation, the investigative reports suggest that part of the digital assets was supposedly diverted before the calamitous FTX collapse. It is claimed that some Steaker funds set aside for the business were inappropriately allocated to operational functions like employee wages and payments to freelance traders. Such actions highlight a glaring lack of stewardship and governance over the management of funds entrusted to Steaker.
Steaker Founder Defends Company Actions
To contain the rising tide of accusations, Huang Weixuan, founder of Steaker, made a public post opportunely claiming that the company’s use of cross-chain assets does not constitute deposit-taking or money laundering in the traditional sense. Moreover, Taiwan’s banking regulators seeking to extend the definition of crypto assets to currency in a bold legal overreach have come under public resistance from Steaker—arguing that this interpretation, if accepted, would severely undermine the framework governing digital assets in the country going forward.
Consequences for Taiwan’s Crypto Regulation
In the eyes of the crypto world, the importance of this case is to set a new boundary of the mark for governance over the conduct of crypto asset platforms concerning conventional financial frameworks.
