Taiwanese cryptocurrency exchange under investigation for money laundering
Bitgin, a cryptocurrency exchange in Taiwan, is currently under police investigation for alleged money laundering, with its Chief Operating Officer, Yuting Zhang, arrested in connection to the infamous “88 Guild Hall” money laundering incident. The exchange is cooperating fully with the investigation and has assured users that its operations remain unaffected.
‘88 Guild Hall’ scandal
The “88 Guild Hall” scandal, which unfolded from late 2021 to March 2022, implicated Zhang in a massive money laundering network. The controversy exposed a multi-billion dollar operation orchestrated by local businessmen Zhemin Guo and Chengwen Tu, utilizing a network of foreign exchange offices and crypto exchanges.
Yuling Tsai, General Counsel of the Taiwan VASP Association, addressed the situation, stating: “This time, a member of the preparatory group was involved in the investigation case. The preparatory group immediately held a meeting and issued a public response. The members involved in the case also took the initiative to suspend participation in the work of the preparatory group.”
Business as usual
In an official statement, Bitgin confirmed Zhang’s association with the scandal and clarified that the ongoing investigation has not disrupted its operations. The exchange emphasized its commitment to cooperating with authorities, providing all necessary assistance to facilitate a smooth investigation process.
The statement reads: “At present, Bitgin is fully cooperating with the investigating unit and actively providing all necessary assistance to ensure the smooth conduct of the investigation and hopes that the facts can be clarified as soon as possible.”
Bitgin also confirmed that in light of the charges, the COO has ceased all communications with counterparties.
Focus on regulation
Taiwan’s Financial Supervisory Commission (FSC) outlined earlier this year its intention to restrict the activity of non-compliant offshore crypto exchanges. While cryptocurrency exchanges are not officially regulated yet, local operators have taken cues from the FSC to move towards self-regulation. A preparatory group was formed in September with Bitgin participating as a founding member.
While Taiwan still doesn’t have a regulatory framework in place, it has applied anti-money laundering (AML) regulation to crypto businesses. In August, leading crypto exchange Binance initiated steps to register for AML compliance in Taiwan.
Earlier this year, Taiwanese officials suggested that they would foster self-regulation while proposing the classification of crypto regulations within their own unique business category. Efforts were furthered last month when legislators introduced a cryptocurrency bill for its inaugural reading.
JPEX fallout
Beyond Bitgin, Taiwan is grappling with the fallout from wayward crypto exchange JPEX, which is accused of orchestrating Hong Kong’s largest financial scam. The authorities raided the local office of JPEX and identified suspects involved in the alleged fraud. To compound matters, local police also uncovered a $320 million crypto money laundering operation earlier this month.
The incidents highlight the ongoing challenges faced by regulators in the region as they strive to protect investors from fraudulent activities.
As the investigation unfolds, the Taiwanese cryptocurrency industry, along with its self-regulatory initiatives, remains under scrutiny, emphasizing the broader need for regulatory frameworks to safeguard the interests of investors and maintain the integrity of the market.
