The Australian Securities and Investments Commission (ASIC) has charged Grant Colthup, the former CEO of Mine Digital, with fraud after a customer allegedly failed to receive Bitcoin valued at 2.2 million Australian dollars (around $1.47 million) in July 2022.
Mine Digital, which operated a cryptocurrency exchange from May 2019 until its collapse in September 2022, is accused of failing to deliver Bitcoin despite receiving the payment.
ASIC’s complaint centres on an alleged misappropriation of funds. Colthup is accused of using the customer’s funds either to settle company liabilities or to purchase cryptocurrencies, or both, rather than delivering the agreed Bitcoin.
However, this isn’t the only allegation the now-defunct firm has faced. Following its collapse in 2022, an investigation by the Australian Financial Review uncovered significant discrepancies in its assets under management, revealing only $20,000 in assets despite creditors claiming losses of $16 million.
In addition to ASIC’s charges, ACCE Australia, the exchnage’s court-appointed liquidator, filed a lawsuit against Colthup in January 2023, seeking compensation for creditors. Colthup faces a potential maximum prison sentence of 20 years under Section 408C of Queensland’s Criminal Code 1899. He is scheduled to appear in court on December 16, 2024.
This case is one of several high-profile legal actions initiated by ASIC against cryptocurrency firms this year. In April 2024, the regulator launched civil proceedings against NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd, accusing them of misleading around 450 investors into purchasing blockchain mining packages via self-managed superannuation funds, leading to investor losses of over 160 million AUD.
ASIC also recently secured a legal victory against Bit Trade, the operator of Kraken’s Australian services, for non-compliance with design and distribution obligations. An Australian Federal Court ruled on August 23, 2024, that Bit Trade had breached section 994B(2) of the Corporations Act, a ruling that marks a significant regulatory enforcement action against crypto operators in Australia.
The regulator had launched a nationwide crackdown on cryptocurrency scams after facing criticism from Australia’s Minister for Financial Services in January for not alerting the public about a $1.3 billion crypto scam.
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