As Sam Lee gears up to defraud consumers with his new StableDAO Ponzi, proceedings in Australia are providing insight into his earliest crypto scams.

I want to preface that Blockchain Global was a cloud mining platform. Its business model is thus of course different to StableDAO and Lee’s various Hyper* Ponzi schemes.

What’s relevant with Blockchain Global is what was going on behind the scenes.

What we already know is Blockchain Global was founded by co-conspirators Lee (aka Samuel Lee, Xue Lee) and Ryan Xu (aka Zijing Xu).

Blockchain Global was a cryptocurrency exchange and mining firm, starting out as Bitcoin Group.

In 2016 Bitcoin Group rebranded as Blockchain Global. In 2017 Blockchain Global spun off ACX, a cryptocurrency exchange.

Blockchain Global and ACX collapsed in 2020. Later that same year Xu and Lee
fled to Dubai
.

Claims received by liquidators would
peg Blockchain Global and ACX losses at $48.9 million
.

As liquidators and presumably also law enforcement hunted them down, Xu and Lee turning up in Dubai is no coincidence. The crime-riddled emirate is notorious for
sheltering scammers from authorities
.

The liquidation of Blockchain Global and ACX hit the Victorian Supreme Court earlier this week. And with that we’ve gained additional information into how Lee runs his scams.

Poor record keeping, comingling of invested funds, misappropriating investor funds for personal benefit and, ultimately, gambling away invested funds.

Sarah Danckert from the Sydney Morning Herald has been
covering proceedings
;

The court heard on Wednesday that Blockchain Global’s ACX exchange took the cash invested by its customer to trade cryptocurrency and mingled the funds into one pooled fund – a practice that is in breach of client money reporting rules for licensed stockbrokers and trading groups but not for the largely unregulated cryptocurrency market.

Under examination by counsel for the liquidators Andrew Silver on Wednesday, Blockchain Global’s chief technology officer, Jin Chen, said the company kept limited records of each customer’s trades and their holdings.

Invested funds were commingled with Blockchain Global’s founder’s personal funds, a loan taken out against ACX’s client balances (unknown to clients) and purported trading profits.

Chen also told the court that he was instructed by Blockchain’s co-founder Allan Guo, who held the roles of chief operating officer and chief investment officer at the group at various times, to transfer bitcoin from the pool of customer funds to other parts of the business.

Other uses of client funds included
:

investing into a cannabis themed shitcoin;

investing in shares of a Canadian company;

topping up Blockchain Global’s founder’s and staff’s bank accounts; and

paying off Blockchain Global’s founder’s and staff’s mortgages

Again, none of this was disclosed to Blockchain Global and ACX clients.

Blockchain Global had told its customers their money would be held in trust while they tra

🤖 Quick Answer

Who founded Blockchain Global and what was its business model?
Blockchain Global was founded by Sam Lee and Ryan Xu as a cryptocurrency exchange and mining platform. Originally established as Bitcoin Group in 2016, it rebranded to Blockchain Global and subsequently spun off ACX cryptocurrency exchange in 2017 before collapsing in 2020.

What regulatory proceedings revealed about Sam Lee's cryptocurrency operations?
Australian legal proceedings investigating Blockchain Global and ACX provided documentation of operational practices occurring behind the scenes. These proceedings offered insights into Lee's early cryptocurrency schemes prior to his involvement with StableDAO and subsequent Hyper* Ponzi structures.

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