Overview: ACE Exchange Former Head and Partner Arrested for Massive Fraud
According to a report by Liberty Times on February 4, Pan, former head of Taiwan's well-known crypto trading platform ACE Fiat-Crypto Exchange, and his partner Lin were arrested on charges of criminal fraud, money laundering, and violations of banking laws. Police have referred 14 individuals, including Pan and Lin, for prosecution. The New Taipei City Criminal Investigation Corps seized over 100 million NTD in cash from Lin's residence and approximately 108 million NTD worth of cryptocurrency at ACE's office, totaling over 200 million NTD. Police estimate that the duo may have defrauded investors of more than 1 billion NTD over three years, luring over 100 victims with false advertisements.
Fraud Methods: Social Media Ads and Exchange Branding
Lin used social media platforms such as Instagram, Facebook, and X (formerly Twitter) to promote fake investment opportunities, enticing investors to buy tokens like MOCT (Magic Coin), NFTC, and BNAT. He claimed these tokens would soon be listed on well-known domestic and international exchanges, promising quick wealth. Pan allegedly facilitated the listing of these fraudulent tokens on ACE Exchange, leveraging the platform's reputation to gain investor trust. The New Taipei City Criminal Investigation Corps noted that ACE exploited information asymmetry, citing Bitcoin's past gains to exaggerate the value of these tokens, while victims ended up with 'garbage coins' or 'air coins' that quickly lost value or became untradeable.
Exchange Response and Regulatory Actions
On the evening of February 4, ACE Fiat-Crypto Exchange released a statement clarifying that the case pertains to the illegal activities of a single token issuer from 2019 and that ACE is cooperating as a witness. It denied media reports that employees were involved, demanding corrections. ACE emphasized that since President Wang Chenhuan took office in September 2023, the exchange has focused on compliance and fully supports investigations. It added that 'the controversy and violations of the specific project party have not impacted ACE's operations' and that the exchange will continue to operate cautiously, aiming to remain among the top three in Taiwan's market. Separately, on January 3, 2024, Taiwan's Financial Supervisory Commission fined Hong Han Creative Ltd 500,000 NTD for conducting virtual currency business without submitting the mandatory AML compliance declaration, as required by law. The company had failed to meet the November 10, 2023 deadline set by the FSC in October 2023.