Taiwanese Crypto Exchange Founder Charged With Money Laundering And Fraud

David Pan, the founder of the Taiwanese crypto exchange ACE, alongside six other suspects, has been charged by prosecutors with fraud and money laundering. According to the official press release, a court ruled the confiscation of Pan’s assets.

Crypto Fraud Investigation Ends With Indictment And Seizing Of Assets

In January 2024, news broke of one of the largest crypto exchanges in Taiwan being under police investigation for alleged fraud. The investigation unveiled a “well-organized” scheme by ACE exchange founders David Pan and Lin Nam to “deceive” victims into investing in worthless virtual currencies.

The police raided over 15 locations, including ACE headquarters, and arrested 14 individuals, including Pan and Lin, as part of the investigation. Additionally, over NT$200 million, worth $6.4 million, were seized during the raids.

The investigation of the suspected money laundering and fraud of ACE and its investee company, Fu Hai Digital Innovation Company, continued. As a result, the Taichung District Attorney’s Office prosecutors indicted Pan and six other suspects with criminal charges this week.

The defendants are accused of violating the Organized Crime Prevention Ordinance, aggravated fraud, and money laundering. The press release states that 162 victims were affected, and the money lost in the fraud amounts to over NT$340 million, worth around $10.7 million.

The prosecutors asked the Taiwanese court to consider that the “circumstances of the crime are significant, and the malice is grave.” As a result, a judge approved the seizing of property of the seven individuals accused.

Around NT$3.48 million in crypto was seized, alongside NT$ 27.5 million in real estate properties, NT$140,000 in deposits, and NT$485,000 in cash. The total amount seized reaches over NT$31.6 million.

Web of Lies And ACE’s Response

Prosecutors found that the defendants engaged in “offline and over-the-counter transactions of virtual currencies through the ‘Alfred Wallet’ App.”

According to the press release, Fu Hai created the Alfred Wallet and offered the A+Card, which was used for fraud. The virtual currency stored-value cards were sold in cooperation with fake investment online groups that promoted them.

With the help of social media groups, the fraudsters promoted and hyped investing in virtual currencies, as crypto “could yield considerable returns.” Moreover, they promoted the purchase of TIDE tokens from specific dealers.

Per the investigation, the accused took advantage of the broad belief that physical stores are more trustworthy. As a result, they urged the victims to purchase their tokens at local stores authorized to operate Fu Hai’s Alfred Wallet.

Personnel in the store would aid the victims in using the A+Card to store their tokens in the Alfred Wallet. However, the defendants used the “operation mode” of the app to manage the wallets. Using this method, the “transfer of currency flows could not be publicly queried in the blockchain ledger.”

Subsequently, the system was used to manipulate the addresses of users’ wallets and control the funds from the backend. When victims tried withdrawing their funds, the members of the fraudulent group would find excuses like “wrong orders” and “account problems” or refuse to give reasons.

Following the indictment, ACE published a statement distancing itself from its founder. The crypto exchange clarified that the Alfred Wallet was not an ACE product, as it “was developed by a third party commissioned by the former director Pan.”

Finally, the exchange reassured users that its trading and operating conditions were normal, guaranteeing the safety of its users’ assets.

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