The well-known cryptocurrency platform XREX recently made shocking news as its two co-founders, Huang Yao-Wen and Hsiao Hui-Tzung, were investigated by the Taichung District Prosecutor's Office for allegedly assisting a fraud group under the ACE exchange in laundering up to 410 million New Taiwan Dollars (NTD) through the 'Afu Wallet'. The prosecutors ultimately made a decision of 'suspended prosecution', and we attempt to uncover the cause and effect. (Background: The Economic Daily reported that 'XREX's Hsiao Hui-Tzung and Huang Yao-Wen are involved in money laundering and confessed during interrogation to receive suspended prosecution'? Chen Mei-Hui passed away and was not prosecuted) (Background supplement: XREX: We believe in justice! We believe that the judiciary will handle the matter fairly and will actively cooperate with the investigation) The core figures of this case are Huang Yao-Wen, co-founder and CEO of Taiwan Chain Technology Company (XREX), and Hsiao Hui-Tzung, co-founder and Chief Revenue Officer. They are accused of assisting the main suspect with the surname Hsu from the 'Afu Wallet' in handling 12.7 million Tether (USDT) (equivalent to 410 million NTD) and attempting to conceal illegal funds through cross-chain transfers. Although the prosecutors had relevant evidence, they ultimately decided on a conditional suspended prosecution for the two founders, sparking widespread discussion in the cryptocurrency community and legal circles. Core of the case: Assisting the 'Afu Wallet' in 'cleaning' According to the Economic Daily, the defendant with the surname Hsu in the Afu Wallet case, in January 2023, contacted Hsiao Hui-Tzung, a co-founder of XREX, for assistance in performing cross-chain conversion operations for cryptocurrency in order to hide the 12.7 million USDT obtained from fraud. This batch of USDT was originally on the TRC20 blockchain, and the defendant with the surname Hsu hoped to convert it to the ERC20 blockchain. By changing the blockchain where the assets are located, it can increase the difficulty for judicial authorities to trace the flow of funds, achieving the purpose of money laundering concealment. The Economic Daily reported that the prosecutors indicated that Huang Yao-Wen and Hsiao Hui-Tzung should have known at the time that such a large amount of virtual asset cross-chain conversion was not a routine service of the XREX platform and posed a high risk of money laundering. However, considering that the defendant with the surname Hsu was an important client in the domestic over-the-counter (OTC) and cross-border exchange fields, they agreed to provide assistance. In specific operations, Hsiao Hui-Tzung used his and his wife's Binance accounts to complete the cross-chain conversion of this batch of USDT in 27 transactions on January 10, 2023. Subsequently, he transferred the converted ERC20 USDT to the virtual wallet designated by the defendant with the surname Hsu. Based on relevant testimonies, detailed transaction records, and account information, the prosecutors determined that the actions of Huang and Hsiao met the criteria for the crime of aiding money laundering under the Money Laundering Prevention Act. Why did the prosecutors suspend prosecution? Although the prosecutors determined that Huang Yao-Wen and Hsiao Hui-Tzung's actions involved money laundering, they ultimately granted a conditional suspended prosecution rather than directly filing charges. The main considerations of the prosecutors included: both Huang and Hsiao admitted their wrongdoing during the interrogation process, showed remorse, and actively cooperated with the investigation; secondly, neither of them had a prior criminal record; furthermore, XREX had previously cooperated with judicial authorities, such as assisting in seizing 30 bitcoins held by the defendant with the surname Hsu, and both have long been dedicated to promoting anti-fraud efforts in the cryptocurrency field. Taking these factors into consideration, the prosecutors believed that their actions were 'a momentary lapse in judgment', and the severity of their crimes was relatively minor compared to the main perpetrator, thus deciding to grant a suspended prosecution with the following conditions: Hsiao Hui-Tzung must pay 5 million NTD to the public treasury. Huang Yao-Wen must pay 3 million NTD to the public treasury. The total amount to be paid by both is 8 million NTD. Both must jointly produce two anti-fraud and anti-money laundering promotional videos, each over 5 minutes long, and publish them on the official XREX website. Both need to jointly provide a total of 40 hours of cryptocurrency knowledge introduction courses to law enforcement agencies or related law enforcement education institutions. It is understood that the two founders have accepted and are fulfilling these suspended prosecution conditions. Legal analysis: What is 'suspended prosecution'? In Taiwan's criminal litigation law, 'suspended prosecution' is a special system. When prosecutors complete their investigation and believe that the defendant indeed has criminal suspicion, they can decide to delay filing charges with the court for a statutory period (usually one to five years), taking into account the defendant's character, past behavior records, the severity of the crime, the attitude after the crime, and other circumstances favorable to the defendant. Suspended prosecution is different from 'non-prosecution' (when prosecutors believe there is no criminal suspicion or insufficient evidence) and 'guilty verdict'. If the defendant can comply with the conditions attached by the prosecutor (such as paying a certain amount to the public treasury, participating in legal education courses, apologizing to the victims, etc.) and does not commit any other criminal offenses during the suspended prosecution period, then after the suspension period expires, the disposition will be finalized, and its legal effect will be equivalent to a non-prosecution disposition, and it will not generally leave a guilty record on the individual's criminal record. However, if the defendant fails to comply with the attached conditions or commits another crime during the suspended prosecution period, the prosecutor can revoke the original suspended prosecution and re-file charges. XREX's response Regarding the involvement of XREX's founders in this case, XREX issued a response through a lawyer's statement, stating that according to legal provisions, suspended prosecution has the same legal effect as non-prosecution when the period expires and has not been revoked. This means that the disposition does not affect the founders' qualifications to continue serving as company executives or responsible persons, nor does it affect the company's continued operation of its virtual currency service provider (VASP) business. XREX also stated in the community: Thank you all for your concern, we are still waiting for the legal documents. We understand that everyone may have doubts or may distrust us, but we continue to work hard. The two founders accepted the prosecutor's proposal for suspended prosecution after considering litigation costs under the advice of lawyers. Related reports: The Economic Daily reported that 'XREX's Hsiao Hui-Tzung and Huang Yao-Wen are involved in money laundering, and confessed during interrogation to receive suspended prosecution'? Chen Mei-Hui passed away and was not prosecuted. XREX's latest response: We believe in justice! We believe that the judiciary will handle the matter fairly and will actively cooperate with the investigation. "XREX's two founders involved in laundering 410 million NTD, why the suspended prosecution? The complete story and official response are out." This article was first published by BlockTempo (the most influential blockchain news media).

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