The core figures in this case are Huang Yao-wen and Xiao Hui-zong, co-founders and executive officers of Taiwan's XREX company. They are accused of assisting the main suspect surnamed Xu from the "AFU Wallet" in handling 12.7 million USDT (equivalent to NT$410 million), and attempting to conceal illegal funds through cross-chain transfers. Although the prosecutor had gathered relevant evidence, they ultimately issued a conditional suspended indictment for the two founders, sparking widespread discussion in the cryptocurrency community and legal circles.
Core of the Case: Assisting AFU Wallet in 'Whitewashing'
According to the Economic Daily, the suspect surnamed Xu contacted XREX co-founder Xiao Hui-zong in January 2023 to seek assistance in cross-chain conversion of 12.7 million USDT obtained from fraud. These USDT were originally on the TRON chain (TRC20), and the suspect wanted to convert them to the Ethereum chain (ERC20). By changing the blockchain of the assets, it would increase the difficulty for judicial authorities to track the funds, achieving the purpose of money laundering and concealment.
The Economic Daily reported that the prosecutor pointed out that the two founders should have already known that such a large-scale virtual asset cross-chain transfer was not a regular service of the XREX platform and carried a high money laundering risk. However, considering the suspect was an important customer in domestic over-the-counter (OTC) and cross-border exchange markets, they agreed to provide assistance.
Specifically, Xiao Hui-zong used his personal and his wife's Binance accounts to complete the cross-chain conversion of this batch of USDT in 27 transactions on January 10, 2023. He then transferred the converted ERC20 USDT to the virtual wallet designated by the suspect. Based on related testimonies, detailed transaction records, and account data, the prosecutor determined that the actions of Huang and Xiao met the criteria for assisting money laundering.
Why Did the Prosecutor Suspend the Indictment?
Although the prosecutor determined that Huang Yao-wen and Xiao Hui-zong's actions involved money laundering, they ultimately issued a conditional suspended indictment instead of directly prosecuting. The main considerations included: both Huang and Xiao admitted to the charges during the investigation, showing remorse and actively cooperating with the investigation; they had no previous criminal records; XREX had previously cooperated with judicial authorities, such as helping to seize 30 bitcoins held by the suspect, and had long been committed to anti-fraud efforts in the cryptocurrency field.
Considering these factors, the prosecutor believed their actions were a "momentary lapse" and that their criminal circumstances were relatively minor compared to the main suspect. Therefore, they decided to issue a suspended indictment with the following conditions:
- Xiao Hui-zong must pay NT$5 million to the public treasury.
- Huang Yao-wen must pay NT$3 million to the public treasury. The total payment is NT$8 million.
- Both must create two anti-fraud and anti-money laundering promotional videos, each over 5 minutes long, to be published on the XREX official website.
- Both must provide a total of 40 hours of cryptocurrency knowledge courses to law enforcement agencies or related law enforcement educational institutions.
It is understood that the two founders have accepted and are currently fulfilling these suspended indictment conditions.
Legal Analysis: What is 'Suspended Indictment'?
In Taiwan's criminal procedure law, "suspended indictment" is a special system. When a prosecutor completes the investigation and believes the defendant has committed a crime, but considers the defendant's character, past behavior, the severity of the crime, post-crime attitude, and other favorable circumstances, they can decide to temporarily suspend prosecution for a legal period (usually one to five years).
A suspended indictment is different from a "non-prosecution" (prosecutor believes there is no criminal suspicion or insufficient evidence) and a "guilty verdict". If the defendant can comply with the conditions attached by the prosecutor during the suspension period (such as paying a certain amount to the public treasury, participating in legal education courses, apologizing to the victim, etc.) and does not commit other criminal offenses during this period, the disposition will be confirmed after the suspension period, with legal effect equivalent to a non-prosecution, and generally will not leave a guilty record in the individual's criminal case history. However, if the defendant fails to comply with the additional conditions or commits another crime during the suspension period, the prosecutor can revoke the original suspended indictment and re-prosecute.
XREX Response
Regarding the case involving XREX founders, XREX responded through a lawyer's opinion letter that, according to legal regulations, a suspended indictment has the same legal effect as a non-prosecution if it expires and is not revoked. This means the disposition does not affect the founders' qualifications to continue serving as company managers or directors, and does not affect the company's continued operation of its Virtual Asset Service Provider (VASP) business.
XREX official stated in the community:
Thank you for your concern. We are currently still waiting for legal documents.
We understand that everyone may have doubts or lose trust in us, but we will continue to work hard.
The two founders, under the advice of lawyers and considering litigation costs, accepted the prosecutor's deferred prosecution proposal.
