Crypto exchange founder in Taiwan arrested for fraud
The cryptocurrency ecosystem has been plagued by exchanges crashing as well as scams such as the FTX scandal. The latest to be caught pulling off a fraudulent scheme is the founder of ACE Exchange, one of the largest crypto exchanges in Taiwan, who has been arrested along with 14 others. David Pan and his associates were arrested by the police and assets worth $6.4 million were seized from 15 locations that were raided in Taiwan. Established in 2018, ACE Exchange is a member of industry associations in Taiwan and it ranks alongside other big firms like the BitoGroup and MaiCoin.
What did ACE Exchange founder David Pan do?
Pan and a co-conspirator Lin Nan are accused of deceiving more than 100 investors by collaborating for over three years. They allegedly used false advertisements on social media platforms like Instagram and Facebook to lure investors into putting money into worthless cryptocurrencies, including MOCT. These tokens were said to be listed on well-known exchanges and the investment was promoted as a get-rich-quick scheme. Further, these tokens were also registered on the ACE Exchange platform, to increase their credibility.
The scale of the fraud
The police raided 15 locations in Taipei, New Taipei, and Taichung, including the base of ACE Exchange on January 4, 2024. A total of $3.6 million in cash was seized from Nan’s residence, and cryptocurrencies worth more than $3.23 million were also found. On the other hand, Pan and the other arrested individuals reportedly refused to cooperate with the police and are currently being held on suspicion of fraud under the Criminal Law, the Money Laundering Prevention Act, and the Banking Act.
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Response from ACE
An ACE Exchange spokesperson said that the suspects arrested in the case were not ACE employees and were operating independently. The representative further clarified that David Pan who founded the company, stopped participating in the day to day operations of the firm back in 2022. Further, the spokesperson stated that the company is currently cooperating with the police and participating in the investigation as a witness.
What’s next for Pan?
In an official statement released by ACE Exchange, the firm has explained its position on the development. It has clarified that the exchange regularly conducts market reviews to assess listed tokens and the ones that fail to meet the criteria will be delisted. The exchange had listed the MOCT token in 2019 and as per the statement, it plans to delist the MOCT-TWD trading pair on January 8, 2024.
The incident highlights the prevalence of pump-and-dump scams in the crypto industry across the globe. Concerns have been raised before related to thinly traded altcoins with uncertain utility as well. Further, an information gap among traders like in this case tends to open up opportunities for unethical individuals to create a sense of FOMO and fuel pump and dump schemes. As per the report, in the recent case, the victims realized that they were scammed only after the coins had plummeted in value leaving no option for them to recover.
