1539 victims! CoinX Technology colluded with a fraud group for Money Laundering of 2.3 billion, prosecution seeks 25 years of imprisonment.

Taiwanese Crypto Assets trader “Bitshine Technology” has been found by the police to be suspected of colluding with a fraud group, assisting in converting victims' cash into Crypto Assets, laundering 2.3 billion within just one year. In April this year, the police launched a search operation, detaining 14 people including the person in charge, Mr. Shih. On August 22, the Shilin District Prosecutor's Office concluded the investigation, prosecuting 14 defendants for fraud, Money Laundering, organized crime, and providing virtual asset services without anti-money laundering registration, among other charges, and recommending the court to impose a 25-year prison sentence on Mr. Shih.

How CoinX Technology Builds a Money Laundering Empire

The prosecution pointed out that a certain individual, Shi, first acquired the “shell” registered for anti-money laundering by the Financial Supervisory Commission through the acquisition of Coin Thinking Technology. He then set up over 40 franchise stores in 14 counties and cities across Taiwan with accomplices to sell USDT. The core of this business model lies in using a legitimate shell to cover illegal activities. Coin Thinking Technology was originally a legitimate operator registered for anti-money laundering by the Financial Supervisory Commission, but after Shi's acquisition, the entire business model underwent a complete distortion.

Franchisees not only need to pay a franchise fee ranging from 1 million to several million yuan, but also must pay an operational deposit of 500,000 to 1 million yuan to Mr. Wang (the franchisee of the Xinyi store), who serves as the actual responsible person of Bai○ Information Consulting Co., Ltd. This high franchise fee is designed for two purposes: first, to filter franchisees with financial strength, and second, to control franchisees through the deposit mechanism to ensure their compliance.

The final funds are all transferred into a specific company account and then exchanged into USD to repurchase USDT, flowing into CEX wallets and anonymous wallets through layers, making it difficult for the police to trace. This complex flow of funds is a typical Money Laundering technique. Cash → Bank Account → USD → USDT → Overseas Exchange → Anonymous Wallet, each layer of conversion increases the difficulty of tracing.

The Shilin District Prosecutors Office in Taiwan pointed out in a press release that “Coin Dream Company has more than 40 physical stores, outwardly pretending to operate virtual currency trading, but in fact it is a fraudulent group, using false investment schemes and other fraudulent tactics to spread fraudulent information to the public via the internet. Coin Dream Company claims to be the 'only one authorized by the Financial Supervisory Commission in the country', causing victims to believe that what Coin Dream Company does is legal. Members of the fraudulent group then instruct victims to bring cash to various Coin Dream Company stores to purchase USDT.”

This kind of “the only nationwide authorized by the Financial Supervisory Commission” false promotion is the most critical link in the entire scam. The fraud group first uses fake investment rhetoric to make the victims believe in the investment opportunity, then guides them to the “legally registered” Coin Idea store to purchase USDT, using Coin Idea's legal facade to dispel the victims' doubts. Many victims lowered their guard and handed over large sums of cash to the store simply because they saw Coin Idea claiming to be “authorized by the Financial Supervisory Commission.”

14 Defendants' Criminal Division of Labor and Role Breakdown

The Shilin District Prosecutor's Office revealed the entire organizational structure of the criminal organization in the brief facts of the crime. The main suspect, a certain Shih, led the acquisition of coin Xiang Technology, responsible for franchise expansion and “pan口” operations, and introduced resources from the fraud group, making him the core figure of the entire criminal network. A man surnamed Yang was responsible for business development and coordination, managing the sources of “pan口” clients, effectively serving as a bridge to connect with the fraud group.

The cash flow part was operated by a man with the surname Wang, who established Bai○ Information Consulting Co., Ltd., controlled bank accounts and the “deposit machine” system, and was responsible for cash settlement, purchasing USDT, and redistributing it to various stores. This role is the most critical in the entire Money Laundering chain because he directly controls every aspect of the capital flow. In the operation of various stores, the prosecutor found that the Keelung Renyi store was managed by a man with the surname Luo, while the Taipei Xinyi store was managed by a man with the surname Su, who served as the store manager and directly faced the victims, completing transactions by “collecting cash and exchanging for USDT.”

On the surface, the company has a “compliance officer” named after a woman with the surname Ye, responsible for designing the KYC system, but in reality, it is merely a formality and exists in name only. A man with the surname Cai is nominally the risk control supervisor, in charge of withdrawal reviews, but he has long been bypassed by the fraud group. This kind of design of “having a compliance department but not executing” is precisely to cope with regulatory inspections, and in reality, it has no effect at all.

The Five-Level Structure of Coin-Related Criminal Organizations

Decision Making Level: Mr. Shi (Acquisitions and Strategy), Mr. Yang (Business Coordination)

Flow Layer: Wang (Foreign Exchange System, Fund Dispatching)

Execution Level: 40 store managers (directly facing the victims)

Pseudo Compliance Layer: Ye (Head of Compliance), Cai (Risk Control Supervisor)

External Collaboration: 8 members from CEX exchanges (providing services without registration)

Three individuals, Shi, Yang, and Wang, are additionally involved in charges of aggravated fraud, Money Laundering, initiating, and directing criminal organizations. Shi, Yang, Lin, Huang, Hsu, Li, Chen, and another Chen, a total of 8 people, are suspected of providing virtual asset services without registering for Money Laundering prevention. All 8 individuals are currently or have previously worked at overseas CEXs. Since the exchange has not passed the Financial Supervisory Commission's compliance declaration or Money Laundering prevention registration, these 8 individuals are charged with providing virtual asset services without registering for Money Laundering prevention.

The main suspect denies the crime, and the prosecution recommends a heavy sentence of 25 years

In response to the accusations, Mr. Shi firmly denied involvement in fraud, arguing that he was simply “acquiring companies and operating franchises,” with the source of funds being borrowed. The men surnamed Yang and Wang admitted that there is indeed a high overlap between overseas CEX and Coin Idea, but it is merely “business cooperation and cash flow coordination.” Other defendants suspected of providing virtual asset services without proper money laundering prevention registration mostly emphasized that they were just “hired employees” and had no knowledge of the fraudulent group behind it. As for Ms. Ye and Mr. Cai, they argued that while the KYC procedures were within their responsibilities, they were unaware that the fraudulent group had preemptively “trained” the victims on how to respond.

What’s even more ridiculous is that the police and prosecutors found that the man named Shi and others were scammed by a man with the surname Gu, who is the head of a technology company, in order to comply with the Financial Supervisory Commission’s regulations. They mistakenly believed that he knew the brother of the director of the Securities and Futures Bureau of the Financial Supervisory Commission and pretended to “assist in passing the Money Laundering registration,” resulting in a loss of 3 million. This created an absurd situation where “the fraud group was defrauded.” After Gu received the aforementioned amount, he did not assist the coin company in any processing. Gu straightforwardly countered, claiming that he was the victim, and that the 3 million was merely a consulting fee.

After a large-scale search, the police and prosecutors seized more than 640,000 USDT, 0.0356 Bitcoins, and 1,520 TRX, with a total value of approximately NT$20 million; additionally, cash amounting to NT$60.49 million, one Ferrari Roma, one Maserati, and a company account deposit of NT$12.4 million were confiscated, totaling about NT$113 million. The prosecution has requested the court to declare confiscation or to legally pursue the value.

The prosecution today charged 14 individuals, including Mr. Shi, Mr. Yang, and Mr. Wang, under the Fraud Prevention Act, the Organized Crime Prevention Act, the Money Laundering Prevention Act, and the Criminal Code for fraudulently obtaining property, and requested the confiscation of criminal proceeds totaling 1.275 billion; Mr. Gu was additionally charged with fraud. The prosecution stated that Mr. Shi denied the charges, showed poor attitude after the crime, and sought a 25-year prison sentence; Mr. Yang and Mr. Wang both pleaded guilty and submitted plans to return the criminal proceeds, which may qualify them for a reduced sentence under regulations; other involved personnel were primarily only suspected of providing virtual asset services without money laundering prevention registration, and considering they belong to the salaried class, they recommended leniency and probation; Mr. Gu denied the charges, and his actions have damaged the image of public servants, resulting in a sentence of 5 months in prison to serve as a warning.

Taichung Beitun Store Case: You Brothers 5.26 Million Fraud

Coin想台中北屯門市 also involved in the case, the prosecution found that a lecturer named You and his brother conspired, finding a man with the surname Bai to act as an intermediary and collaborate with a fraud group, resulting in 9 people smashing a total of 5.26 million yuan to buy Tether coins, but all were transferred into the fraud group's electronic wallet. Mr. You was a former trading program analyst and a lecturer of Crypto Assets. He funded the establishment of Coin想北屯門市, with his brother serving as the store manager, collaborating with the fraud group member Mr. Bai. Through Bai acting as an intermediary, they guided people wanting to buy virtual coins to join the official LINE account of 北屯門市 to contact for purchasing Tether coins.

You Nan hid behind the scenes, allowing his brother to collect the defrauded funds from the victims. You continued to provide Bai with scripts to guide the victims to come in and tips for transactions at the store, while Bai reported the payment status to the fraud group. In August 2024, 9 victims were deceived by the fraud group, which used scripts such as “guaranteed profits in investing in Crypto Assets” to lure victims to a designated store in Beitun, where they made transactions using an electronic wallet controlled by the fraud group, spending a total of 5.26 million to buy Tether.

As long as the public comes to consume, the You brothers will contact the Coin Exchange headquarters, ostensibly converting cash into encryption, but in reality transferring Tether into the fraud group's electronic wallet, with You and Bai profiting from transaction fees. Later, when the victims wanted to redeem their funds, they were obstructed by being asked to pay a high collateral, realizing they had been deceived. The prosecutor's office examined the mobile phone conversations and found that the fraud group had posted about the Coin Exchange being investigated in news on April 28 of this year, and stated, “That Beitun store manager, delete some of the content from Telegram,” indicating a close connection between the fraud group and the storefront.

The prosecution has determined that the You brothers and Bai Nan are involved in organized crime, money laundering, and aggravated fraud. After the investigation concluded, they were indicted based on the latter charge, and the court decided to continue the detention of the three individuals.

Coin Fraud Warning: Legal Shells Are Difficult to Prevent Fraud Use

The case of CoinX Technology reveals serious loopholes in Taiwan's Crypto Assets regulation. Although CoinX obtained registration for Money Laundering prevention from the Financial Supervisory Commission, this “legal status” has instead become the best cover for fraud groups. They claim to be the “only one authorized by the Financial Supervisory Commission in the country,” leading countless victims to mistakenly believe in their legitimacy and hand over cash to their stores without any defense.

The implications of this case for Taiwan's Crypto Assets industry are profound. Regulatory registration does not equal government endorsement, and investors should not let their guard down just because operators claim to be “licensed.” Furthermore, if KYC and compliance systems only exist in form but are not actually enforced, they may instead become a shield for fraudulent groups.