Australia’s corporate regulator will examine details of collapsed bitcoin company Blockchain Global after a Guardian Australia investigation revealed links between two of its directors and a series of failed cryptocurrency investment schemes.
Blockchain Global collapsed in 2021 owing $58 million to creditors, with the liquidator referring its directors – Alan Gu, Sam Lee and Ryan Shaw – to the Australian Securities and Investments Commission over potential breaches of the Corporations Act. This included potential breaches of a director’s duties, breaches of confidence, and unreasonable transactions relating to the director.
Asic initially informed liquidators Pitcher Partners that it did not intend to take any action after it received the first report on the company’s activities in March 2022.
But following a Guardian Australia investigation into the HyperVerse cryptocurrency investment scheme, which has links to Lee and Xu, Asic began examining the liquidator’s report. The final version was submitted to Asic in October.
An Asic spokesperson told Guardian Australia: “Asic confirms it is evaluating reports received from the liquidator in relation to BGL.”
Guardian Australia has revealed widespread losses in the HyperVerse investment scheme, which has escaped the attention of regulators in Australia despite authorities overseas describing it as a potential “scam” and others as a “suspected pyramid scheme”.
Court documents filed in January in the US against Bitcoin Rodney, one of the top US promoters of HyperFund and HyperVerse, allege that the scheme works with a network or promoters who offer “fraudulent promotions” to investors and potential investors. He was charged with operating and conspiring to operate an unlicensed money transfer company.
An affidavit filed by the US Internal Revenue Service alleges that early investors were “funded by funds raised from new investors,” and that the revenue-generating Bitcoin mining operations the company claims did not exist. Neither Xu nor Lee were mentioned in court documents filed by authorities in this case.
Lee denied being behind HyperVerse, saying his involvement was limited to providing technology and the money management side of the organization. Both Lee and Xu appeared at the HyperVerse global launch event in 2021, alongside a fake CEO named Steven Rhys-Lewis. Both Xu and Lee also appeared prominently in promotional materials for the schemes that preceded HyperVerse, known as HyperFund and HyperCapital.
The Guardian has since revealed that Rhys Lewis is British man Stephen Harrison, who said he was hired briefly via a talent agent to play the role of “corporate presenter” and that he had no role in the actual work.
Lee moved to Dubai in 2021, while Xu’s whereabouts are unknown. Guo is not involved in Hyper Group’s plans.
US-based cryptocurrency analysis firm Chainasis estimates that HyperVerse losses in 2022 amounted to US$1.3 billion (AU$1.97 billion).
Asic’s move to examine Blockchain Global’s collapse comes as the liquidator also reveals a possible link in the company’s records to the operation of HCash, which was a cryptocurrency linked to the Hyper investment schemes.
“The liquidators have identified two debt transactions totaling US$500,000 in Blockchain Global’s main bank account (linked to HCash). These transactions take place on 5 August 2019,” Pitcher Partner liquidator Andrew Yu told The Guardian Australia.
“It is not clear whether the funds were used for this intended purpose.”
Rewards collected through previous Hyper schemes were converted to HCash before being converted to other cryptocurrencies.
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According to the HyperTech Group Organizational Chart, HCash was one of three Australian companies behind Hyper’s investment schemes, in alliance with Blockchain Global, Collinstar Capital and the HCash Foundation.
According to HyperTech Group’s promotional materials, Collinstar Capital, Blockchain Global, and HCash were a “multi-billion dollar conglomerate.”
HCash’s official Telegram group confirmed its association with HyperTech and HyperCapital in 2019, saying it was “allied with the HyperTech group.”
Asic documents show that HCash Tech Pty Ltd was owned by Xu and Jianbo “Jacob” Cheng and was established in 2017. An application to cancel its registration was filed in May 2023.
Collinstar Capital was owned by Xu until mid-2022, after which it was acquired by Cheng.
Asic documents reveal that the company’s 40 founder shares were transferred from Xu to Cheng for $5.50, while 200,000 non-cumulative preferred shares were transferred at no cost, with a value of $125,000 listed as unpaid.
Cheng did not respond to Guardian Australia’s questions.
Lee did not respond to Guardian Australia’s questions prior to the publication of an earlier article about his involvement in creating and operating the HyperFund and HyperVerse. He has previously denied that the schemes are a scam.
In a WhatsApp message after the article was published, he claimed it included “false statements” about his role in running the Hyper schemes, but did not respond when asked what it was. He also claimed that “people on the internet keep (sic) making stuff up.”
Lee also did not respond to Guardian Australia’s questions about the liquidators’ findings in relation to Blockchain Global.