The founder of XREX is involved in Money Laundering of 410 million and is subject to deferred prosecution, must pay a fine and promote anti-fraud videos.

Taiwan’s virtual currency circle breaks up money laundering controversy again! Chen Meihui, a financial crime investigator at XREX, died in a car accident at the end of last year, which aroused great concern in the society, and then implicated two founders, Xiao Huizong and Huang Yaowen, in the “Afu Wallet Case” virtual currency money laundering case. The Taichung District Prosecutor’s Office found that the two assisted the fraud group to exchange 12.7 million Tether (USDT) for chains, involving a laundering amount of NT$410 million. In the end, considering that the two pleaded guilty well, the District Prosecutor’s Office decided to suspend the prosecution, and attached a fine and education promotion conditions.

The A-Fu Wallet scam case involves XREX executives.

According to United Daily News, prosecutor Zhang Fujun from the Taichung District Prosecutors Office discovered that the “Afu Wallet” APP operated by ACE Company was suspected of fraud and Money Laundering exceeding 300 million. The case was resolved and prosecuted in March last year, but the prosecution did not stop there and continued to trace and investigate, discovering that it involved cross-chain activities of Virtual Money.

Further investigation revealed that the defendant with the surname Hsu in the “Afu Wallet Case” had contacted XREX founder Hsiao Hui-tsung in January 2023, requesting to convert a large amount of USDT from TRON to Ethereum in an attempt to cover up the flow of funds.

Knowing and still assisting with cross-chain, the founder of XREX is thus involved in Money Laundering.

The prosecutors pointed out that Hsiao Hui-Chung and Huang Yao-Wen, as the CEO and Chief Revenue Officer of XREX, should clearly understand that providing large amounts of virtual money cross-chain for others is not a formal service of the company and that this action carries a high risk of concealing criminal funds. Despite knowing it goes against normal practices, the two still discussed and decided to cooperate, believing there was an opportunity to expand the over-the-counter trading and large-scale cross-border money exchange market, thereby enhancing the exchange’s business.

Without verifying the source of funds, Xiao Huizong assisted Mr. Xu in operations using personal and his wife’s Binance exchange accounts to swap the fraudulent funds in the Afu Wallet to another chain.

In just one day, converted 12.7 million USDT

According to the investigation, on January 10, 2023, Xiao Huizong conducted a total of 27 transactions through his and his wife’s accounts, successfully converting a total of 12.7 million USDT (worth approximately 410 million New Taiwan dollars) from TRON to Ethereum, and transferring the funds to a designated Wallet.

The prosecution has obtained complete transaction records, account information, and related testimonies, confirming that the two individuals are involved in Money Laundering activities.

Plea bargaining for deferred prosecution requires promoting anti-fraud advocacy.

During the inquiry, both Xiao Huizong and Huang Yaowen admitted to the crime. Considering that neither of them has a criminal record, and that XREX has previously cooperated with judicial authorities in seizing 30 bitcoins from Mr. Xu and has actively cooperated with the investigation, the district prosecutor’s office deemed that the circumstances of their crimes were relatively simple, thus agreeing to a deferred prosecution.

However, the conditions for the deferred prosecution are quite strict: Hsiao Hui-tsung must pay 5 million to the public treasury, while Huang Yao-wen must pay 3 million. At the same time, both of them must publish two anti-fraud and anti-money laundering promotional videos of over 5 minutes each on the XREX official website, and provide 40 hours of basic knowledge courses on Virtual Money for judicial authorities or law enforcement educational institutions.

What is deferred prosecution?

“Deferred Prosecution” (officially known as “Deferred Prosecution Disposition”) is a type of criminal procedure disposition stipulated in Article 253-1 of the Criminal Procedure Law. In simple terms, it means:

After investigation, the procurator determined that the defendant was suspected of committing a clear crime, but believed that there was no need to initiate a public prosecution immediately, but first gave the defendant a period of observation and let him perform certain conditions, and temporarily did not initiate a lawsuit. If, during this period, the defendant behaves well and fulfills the conditions, the prosecutor will simply close the case and not prosecute.

Under what circumstances can a deferred prosecution be applied?

According to Article 253-1 of the Criminal Procedure Law, the following basic conditions must be met in order to apply for deferred prosecution:

The criminal suspicion is clear (not innocent or insufficient evidence, but there are criminal facts).

According to the law, prosecution should have been initiated (the threshold for prosecution has been met).

Considering the nature of the crime, the character of the defendant, prior convictions, and the attitude after the crime, it is believed that not initiating prosecution immediately can still uphold legal order.

For example:

The crime is minor.

First-time offenders or occasional offenders

Willing to compensate the victim for losses and apologize.

Willing to pay a certain amount to the public treasury (commonly known as “donation”)

Other performances are good, with a sense of reform and renewal.

This article discusses XREX founder involved in Money Laundering of 410 million in Virtual Money and has been granted a deferred prosecution, must pay a fine and push back against fraud videos, first appearing on Chain News ABMedia.