Guo Wengui, an exiled Chinese billionaire, was arrested in New York on Wednesday for allegedly orchestrating a more than US$1 billion fraud conspiracy that included cryptocurrency, according to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
See related article: U.S. banking regulators warn against cryptocurrency fraud, contagion risks
Fast facts
- Guo — known variously as Miles Guo, Ho Wan Kwok or “Brother Seven” — has been charged by the DOJ with 12 counts of wire fraud, securities fraud, bank fraud and money laundering, on suspicion of soliciting investments in various entities through false statements and representations to “hundreds of thousands of Kwok’s online followers,” the DOJ said in a Wednesday statement.
- Guo, along with other defendants, obtained more than US$262 million in victim funds through the Himalaya Exchange, a purported cryptocurrency ecosystem, the DOJ said, adding it had seized approximately $634 million from 21 different bank accounts linked to the alleged fraud.
- The DOJ alleges Guo lied and promised his victims outsized returns if they backed a number of his ventures, including GTV Media Group Inc., a media company Guo formed in 2020 with Steve Bannon, a former advisor to U.S. President Donald Trump.
- Guo, known for his criticism of the Chinese Communist Party, was also charged by the SEC on Wednesday for his involvement in unregistered and fraudulent offerings that raised over US$850 million.
- The SEC said one of the offerings raised hundreds of millions of dollars from investors through a crypto asset security referred to as “H-Coin” or “Himalaya Coin” by falsely stating that 20% of H-Coin’s value was backed by gold and that “he would personally compensate investors for any potential losses.”
- “In reality, Guo took advantage of the hype and allure surrounding crypto and other investments to victimize thousands and fund his and his family’s lavish lifestyle,” Gurbir S. Grewal, director of the SEC’s division of enforcement, said in a Wednesday statement. CNN reported that Guo had been denied bail in a hearing the same day.
- “Kwok is charged with lining his pockets with the money he stole, including buying himself, and his close relatives, a 50,000 square foot mansion in New Jersey, a US$3.5 million Ferrari, and even two US$36,000 mattresses, and financing a US$37 million luxury yacht,” U.S. Attorney Damian Williams said Wednesday in the DOJ statement.
See related article: How crypto crimes are evolving, and what to expect in 2023