What happened?
XREX CEO Huang Yao-wen and revenue officer Hsiao Hui-tsung were found by the Taichung District Prosecutor's Office to have allegedly assisted the 'A-Fu Wallet' fraud group in converting Tether worth approximately NT$410 million (12.7 million coins) across chains, helping the fraud group conceal the flow of illegal funds.
The prosecutors considered that Hsiao Hui-tsung and Huang Yao-wen admitted to their crimes, had no prior offenses, and cooperated with the investigation, thus granting deferred prosecution. However, the deferred prosecution came with additional conditions, including that the two must pay NT$8 million to the treasury and promote anti-fraud and anti-money laundering campaigns on the XREX platform.
During the investigation of the 'A-Fu Wallet' money laundering case, the source of leaked interrogation records was discovered in the folder of the fraud group's data, leading to the summoning of XREX investigator Chen Mei-hui and her police officer boyfriend. Shortly after being summoned, Chen Mei-hui tragically died in a car accident, and the prosecutors ultimately issued a non-prosecution order due to her death.
XREX founders involved in cryptocurrency money laundering receive deferred prosecution.
At the end of 2024, Chen Mei-hui, a financial crime investigator at XREX (Chain Technology Company), tragically died in a car accident, attracting significant social attention. This tragedy further implicated the company's two founders, Huang Yao-wen and Hsiao Hui-tsung, in a large-scale virtual currency fraud case involving the 'A-Fu Wallet' money laundering controversy.
After investigation by the Taichung District Prosecutor's Office, it was found that the two had assisted a fraud group in conducting cryptocurrency cross-chain operations worth up to NT$410 million. Considering that the two admitted guilt during the investigation and cooperated, the prosecutors ultimately granted a deferred prosecution order, but attached conditions of paying high fines and promoting anti-fraud campaigns.
The A-Fu Wallet case implicates senior executives of XREX, with money laundering methods involving cross-chain operations.
The source of this case is the Taichung District Prosecutor's Office investigating the ACE company's 'A-Fu Wallet' app, which is suspected of fraud and money laundering exceeding NT$300 million.
According to reports from (United News Network), when investigating the flow of funds, the prosecutors found that the fraud group used cross-chain methods of cryptocurrencies to conceal the flow of funds. Further tracing revealed that the defendant with the surname Hsu in the 'A-Fu Wallet case' had contacted XREX co-founder Hsiao Hui-tsung in January 2023, requesting assistance to convert a large amount of Tether (USDT) from the TRON chain to the Ethereum chain.
The prosecutors discovered that Hsiao Hui-tsung and XREX co-founder Huang Yao-wen, as professionals in the blockchain and cryptocurrency field, should clearly understand that providing cross-chain services for large amounts of cryptocurrency to others is not within the normal scope of the company's business and carries the risk of concealing criminal funds.
However, after discussion, the two decided to cooperate, hoping to develop an over-the-counter (OTC) and cross-border currency exchange market through such large operations, thereby expanding XREX's business.
Without thoroughly verifying the legality of the funds' source, Hsiao Hui-tsung assisted the defendant with the surname Hsu in cross-chain operations through his and his wife's Binance accounts. According to investigations, Hsiao Hui-tsung conducted 27 transactions in just one day on January 10, 2023, successfully converting a total of 12.7 million USDT (valued at approximately NT$410 million at that time) from the TRON chain to the Ethereum chain, and transferring the funds to a designated wallet.
The prosecutors have obtained complete transaction records, account data, and related testimonies, determining that the two are suspected of money laundering activities.
The founders pleaded guilty and received deferred prosecution, required to pay fines and promote anti-fraud campaigns.
During the interrogation, both Hsiao Hui-tsung and Huang Yao-wen admitted to their crimes. The prosecutors considered that neither had prior offenses, and XREX previously cooperated with judicial authorities in seizing 30 bitcoins from the defendant with the surname Hsu and actively assisted in the investigation, believing the criminal circumstances of the two were relatively simple, thus agreeing to grant deferred prosecution.
However, the deferred prosecution comes with stricter conditions: Hsiao Hui-tsung must pay NT$5 million to the treasury, and Huang Yao-wen must pay NT$3 million.
Additionally, the two were required to publish two anti-fraud and anti-money laundering promotional videos of at least five minutes each on the XREX official website, and jointly provide 40 hours of basic cryptocurrency knowledge courses for judicial or law enforcement educational units.
The case of Chen Mei-hui's car accident death is also implicated, and she was granted a non-prosecution order due to her death.
It is noteworthy that the investigation of this money laundering case also inadvertently involved the unfortunate car accident death of Chen Mei-hui at the end of last year.
While investigating the A-Fu Wallet case, the prosecutors discovered dozens of complete victim interrogation records from the cloud data of money laundering accomplices. To clarify whether the source of the records involved a leak, on December 3 of last year, they summoned Chen Mei-hui and her police officer boyfriend surnamed Hsieh, as well as Hsiao Hui-tsung, Huang Yao-wen, and other four individuals, and included them as defendants.
Chen Mei-hui and the police officer surnamed Hsieh, after being questioned, unfortunately encountered a serious car accident while returning to the north together via Uber on the night of December 4, where Chen Mei-hui sustained severe injuries and died. During her life, she contributed significantly to investigating illegal financial flows and had assisted in high-profile cases such as 'Creative Private Room', '88 Club', and Cambodia fraud. Her untimely death sparked speculations about conspiracy theories in society.
Regarding the leak and violation of personal data laws, the prosecutors found that a police officer surnamed Hsieh was suspected but also granted deferred prosecution. As for Chen Mei-hui, she received a non-prosecution order due to her death, according to criminal procedure law regulations.
What is deferred prosecution? What does it mean?
'Deferred prosecution' (officially known as 'deferred prosecution order') is a system in Taiwan's (Criminal Procedure Law), mainly stipulated in Article 253-1.
In simple terms, deferred prosecution means:
After investigation, the prosecutor believed the evidence of the defendant's criminal suspicion was clear and sufficient to support prosecution. However, considering the specific circumstances of the case, the defendant's character, attitude after the crime, severity of the crime, prior offenses, and willingness to compensate the victims, the prosecutor believed that even if the defendant was not temporarily sent to court for trial, the goals of maintaining order or promoting the defendant's rehabilitation could still be achieved.
The prosecutor will issue a deferred prosecution order to the defendant, which will set a specific deferred prosecution period (usually 1 to 5 years) and may attach some conditions requiring the defendant to comply with or fulfill during the deferred prosecution period. If the defendant complies with the regulations of the order and fulfills the additional conditions without being discovered for new crimes or violating other important regulations during the deferred prosecution period, upon its expiration, if the prosecutor does not revoke the deferred prosecution order, then this order will have the same effect as a non-prosecution order.
This also means that the defendant's case has come to an end and will not enter the court trial process, nor will there be a criminal judgment record (but in specific circumstances, the record of deferred prosecution may still be queried).
XREX responds: Deferred prosecution does not affect the qualifications of the founders or the company's business.
Regarding the outcome of this case, XREX quickly provided a legal opinion in the community, stating that the results of the investigation involving the two founders resulted in deferred prosecution.
According to legal opinions, if the deferred prosecution period expires without revocation, its legal effect is equivalent to a 'non-prosecution order,' which does not affect the qualifications for serving as a company manager, director, or responsible person, nor does it affect the company's continued operation of virtual asset service provider (VASP) business.
Therefore, upon the lawyer's advice, the two founders accepted the prosecutor's proposal for deferred prosecution and are awaiting the formal document delivery.
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