DOJ and SEC Charge Exiled Chinese Businessman with $850 Million Fraud Conspiracy

SEC Charges Exiled Chinese Businessman Miles Guo and His Financial Advisor William Je in $850 Million Fraud Scheme

The Securities and Exchange Commission today charged exiled Chinese businessman Miles Guo and his financial advisor William Je for their involvement in unregistered and fraudulent offerings that raised more than $850 million.

According to the SEC’s complaint, since April 2020, Guo, also known as Ho Wan Kwok, Miles Kwok, Wengui Guo, and Brother Seven, and his longtime financial advisor, Je, also known as Kin Ming Je, misappropriated a large portion of the funds raised from investors to enrich themselves and their family members, who are named as relief defendants. For example, in connection with a private placement offering of common stock in GTV Media Group, Inc. (GTV), Guo and Je allegedly diverted $100 million of investor funds to a hedge fund for the sole benefit of a company that is owned by Guo’s son. Additionally, Guo allegedly misappropriated investor proceeds in two other offerings to fund his and his family’s lifestyle, including misappropriating approximately $40 million to purchase and renovate a mansion in New Jersey and $3.5 million to purchase a Ferrari for his son.

Guo Wengui Charged in Alleged $1 Billion Fraud Conspiracy

Federal prosecutors in Manhattan have charged exiled Chinese businessman Guo Wengui with duping investors out of hundreds of millions of dollars to bankroll the purchase of a sprawling mansion, a 145-foot luxury yacht and other lavish items.

Mr. Guo, also known as Kwok Ho Wan, was arrested Wednesday morning in New York and is charged with 11 counts of fraud and money laundering, according to an indictment unsealed Wednesday in New York federal court. Prosecutors said he orchestrated a $1 billion scheme that preyed on hundreds of thousands of his online followers to purchase stock in his media company, fund a farm loan program and join a luxury-services club.

SEC Proposes New Cybersecurity Rules for Financial FirmsBrokers and asset managers would have to notify their customers of data breaches as part of a raft of cybersecurity and resiliency rules the Securities and Exchange Commission proposed Wednesday.

The customer-notification requirement would give firms no more than 30 days to alert individuals whose sensitive information was likely to have been accessed without authorization. The new rule would come alongside additional expansions to the SEC’s 24-year-old regulation governing financial firms’ protection of customer data, which SEC Chair Gary Gensler tied to soaring reports of identity theft.

Signature Bank’s Prospective Buyers Must Agree to Give Up All Crypto Business: Report

Signature Bank is on the market after being shuttered by state regulators on Sunday, but any potential buyer reportedly has to agree to a major caveat: no crypto.

Reuters first reported the development on Wednesday evening, citing sources familiar with the matter.

Santander, HSBC, Deutsche Bank, Others Still Willing to Serve Crypto Clients After Banking Failures, DCG Says

Crypto conglomerate Digital Currency Group (DCG) is trying to find new banking partners for portfolio companies following the collapse of Silicon Valley Bank (SVB), Signature Bank (SBNY) and Silvergate Bank, according to a memo viewed by CoinDesk.

Santander (SAN), HSBC (HSBA), Deutsche Bank (DB), BankProv, Bridge Bank, Mercury, Multis and Series Financial are still willing to connect with crypto firms, according to the memo.

Cybercriminals’ crypto platform ChipMixer seized in international operation

International authorities have cracked down on the cryptocurrency platform ChipMixer, alleging it helped obscure the digital money trail for online drug dealers, Russian military hackers and North Korean cybercriminals, Europe’s Europol police agency and the U.S. Department of Justice said on Wednesday.

The site – which authorities say laundered more than $3 billion worth of cryptocurrency – was offline on Wednesday, replaced by a banner which read, “THIS WEBSITE HAS BEEN SEIZED” and displaying the logos of German, American, Swiss and Polish law enforcement organizations.

Gensler suggests proof-of-stake tokens are securities

“The investing public is investing anticipating a return, anticipating something on these tokens, whether they’re proof-of-stake tokens, where they’re also looking to get returns on those proof-of-stake tokens and getting 2%, 4%, 18% returns,” Gensler said. “Whatever they’re promoting and putting into a protocol, and locking up their tokens in a protocol, a protocol that’s often a small group of entrepreneurs and developers are developing, I would just suggest that each of these token operators … seek to come into compliance, and the same with the intermediaries.”

Gensler made the remarks after being asked for his reaction to statements made last week by Commodity Futures Trading Commission Chair Rostin Behnam, who reiterated his own belief, and that of his agency, that ether is a commodity.

FTX Paid Around $2.2B to Sam Bankman-Fried, New Management SaysBankrupt cryptocurrency exchange FTX transferred $2.2 billion to founder Sam Bankman-Fried through various entities, the firm’s new management said.

A total of $3.2 billion was paid to Bankman-Fried and other key employees, according to a Schedules of Assets and Liabilities and Statements of Financial Affairs filed Wednesday, the company said in a statement.