Prosecutors yesterday filed charges of financial fraud against proprietors and executives of cryptocurrency trading platforms BitShine and CoinW over alleged collusion with organized crime on money laundering and fraudulent investment schemes.
BitShine operated 45 offices in Taiwan for trading cryptocurrency, and allegedly made NT$1.27 billion (US$41.5 million) in illicit profits over one year, while also engaging in money laundering to the value of NT$2.3 billion, with 1,539 investors as victims, the indictment said.
The Shilin District Prosecutors’ Office indicted 14 suspects in connection with the case, including Kevin Shih (施啟仁), head of BitShine and also listed as head of operations for Southeast Asia for CoinW; Shih’s wife, CoinW chief marketing officer for Southeast Asia Lin Ko-wen (林可文); and BitShine executives and managers, surnamed Yang (楊), Wang (王), Hsu (許) and Lee (李).
Photo: CNA
After receiving complaints of illegal money flows, judicial authorities launched an investigation, conducting searches at BitShine offices in April, summoning suspects for questioning, and seizing NT$60 million in cash, and about 640,000 in Tether coins and other cryptocurrencies, prosecutors said.
Investigators alleged that Shih was a member of a criminal syndicate known as the Heavenly Way Alliance. Some local BitShine office proprietors are also affiliated with the triad, and several are members of the Bamboo Union gang.
The 14 have been indicted on charges of aggravated fraud, contraventions of the Money Laundering Control Act (洗錢防制法) and the Organized Crime Prevention Act (組織犯罪防制條例), along with providing illegal cryptocurrency financial services, with prosecutors requesting the highest punishment of 25 years imprisonment for Shih.
Shih allegedly led Taiwan and Southeast Asia operations for CoinW, a global cryptocurrency exchange company based in Dubai, although the Financial Supervisory Commission (FSC) had not approved its operations in Taiwan.
Financial records showed that Shih used CoinW capital to purchase ownership of BitShine, a Taiwanese cryptocurrency trading platform headquartered in New Taipei City, in which Shih paid NT$19.2 million in Tether in April last year, investigators said.
The acquisition came after BitShine was added to a list of FSC-approved cryptocurrency traders for implementing measures to counter money laundering, which Shih used to claim to be “approved by the FSC for operating a legal cryptocurrency exchange,” investigators said.
After acquiring BitShine, Shih allegedly circulated online promotions for investing in Tether and other cryptocurrencies, as well as offering purchases and exchanges with New Taiwan dollars, and the transfer of digital assets, prosecutors said.
He also offered “franchising rights” to allow investors to open BitShine offices, with fees of NT$1 million, plus another NT$1 million per franchisee as a “guarantee deposit,” they said.
Investigators said they also found evidence that Shih and his wife colluded with organized crime for BitShine offices to operate as money-laundering centers for investment scams, enticing people to invest in cryptocurrency, which were then channeled into a CoinW digital wallet controlled by Shih and his wife.
Shih and company executives made extensive use of social media to promote BitShine investment schemes and trading in cryptocurrency, linking up with influencers to create an impression that BitShine was legal and approved by the FSC, according to the indictment.
Prosecutors said some people questioned the money flow and asked for refunds, but Shih allegedly used threats and intimidation to silence them.
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