This Wednesday, US authorities arrested and charged Ho Wan Kwok—also known as Miles Guo—an exiled Chinese businessman for orchestrating a massive fraud through Hymalaya Exchange, a supposed cryptocurrency ecosystem. Both the SEC and the DoJ unveiled their lawsuits on March 15th.

Image courtesy of 123rf. via The Tokenist

SEC and DoJ Arrest and Charged Exiled Chinese Businessman

According to the SEC and the DoJ, Ho Wan Kwon orchestrated a massive fraud primarily using a supposed cryptocurrency exchange called the Himalaya Exchange. The scheme promised “outsized returns” to investors which it claimed were made possible thanks to the platform’s stablecoin—Himalaya Dollar—and a trading coin—Himalaya Coin.

The defendant is also charged with laundering hundreds of millions in an effort to hide his illicit activity. Kwok reportedly used his ill-gotten gains to vastly enrich himself, and his family, and bought a number of luxury items and properties. While a possible standout from Kwok’s collections comes in the form of two $36,000 mattresses, he made multiple far more extravagant purchases. The US Attorney for the Southern District of New York made a showcase of some of the seized items on Twitter:

DoJ’s twelve counts against Kwok carry a maximum prison sentence of 215 years. For its part, the SEC stated it has “collected more than $454 million in disgorgement, prejudgment interest, and penalties, including approximately $70 million previously transferred to the hedge fund discussed above, from GTV and two other charged entities” and added that it is “distributing the funds collected to harmed investors”. In the press release, the Commission designated the Himalaya Dollar and the Himalaya Coin as unregistered securities.

US Authorities Increasingly Cracking Down on Crypto-Related Fraud

In recent weeks, much attention has been given to regulators’ aggressive approach to seemingly innocent actors within the digital asset industry. In February in particular, the SEC targeted stablecoins through its action against Paxos’ BUSD, and crypto staking through its settlement with Kraken. Coinbase’s CEO even hinted that the watchdogs may be moving to ban staking in the US entirely.

The climate caused by recent regulatory actions also led to some speculation that the sudden closing of the crypto-friendly Signature Bank on Sunday was a part of the effort to crack down on the digital asset sector rather than a result of something actually being wrong with the bank. Regulators have, however, denied the hypothesis.

Despite such actions being in the headlines, US watchdogs recently undertook several major actions against unambivalent schemes to defraud investors, and launder money. Recently, a selection of agencies revealed their massive enforcement action against the Russian exchange BitZlato. Furthermore, the Department of Justice is ramping up its efforts against Sam Bank-Fried and his involvement with fraud committed by FTX and has added four additional charges against him.

More By This Author:

SVB Facing Fraud Lawsuit For “Mismanaging Events” Prior To Collapse
Signature Bank Shut Down By US Regulators Over Systematic Risk Fears
How Stablecoins Can Gain from Silvergate’s Demise