What happened?
Steaker platform and its founder Huang Wei-Hsuan, along with others, have been accused of illegally raising nearly 1.5 billion New Taiwan dollars by launching high-yield virtual currency investment schemes that promised capital protection and profit. The Taipei District Prosecutor’s Office has indicted them on charges of violating the Banking Act.
The bankruptcy of the FTX exchange significantly impacted Steaker, leading to liquidity issues that prevented the platform from enabling withdrawals for investors, which in turn prompted investor complaints and triggered an investigation by authorities.
Steaker Founder Indicted
Once hailed as a rising star in Taiwan’s blockchain industry, the digital asset management platform Steaker and its founder and CEO Huang Wei-Hsuan have recently been formally indicted by the Taipei District Prosecutor’s Office for allegedly violating the Banking Act. This case has not only shocked Taiwan’s cryptocurrency community but also highlighted the potential legal risks in the virtual asset investment sector.
According to reports from the United Daily News, the prosecution’s investigative report indicates that the Steaker platform, operated by Seychelles-based company SimTech, has offered multiple cryptocurrency investment plans with annual interest rates ranging from 3.5% to 88% since September 2019, under Huang Wei-Hsuan’s leadership. This was done in collaboration with CTO Hsiu Min-Chieh, COO Pan Yi-Ting, and CMO Lu Tien-Hsin, using the lure of “capital protection and profit” to attract investments in mainstream cryptocurrencies such as Tether (USDT), USDC, BUSD, DAI, Ethereum (ETH), and Bitcoin (BTC).
The investigation revealed that the Steaker platform managed investor funds by establishing personal accounts and a shared wallet for the platform. Once the virtual currency in the personal wallet reached a certain amount, it would automatically transfer to a platform wallet jointly signed by Huang Wei-Hsuan, Hsiu Min-Chieh, and Pan Yi-Ting. Huang then instructed Hsiu to transfer these funds into his sub-account on the FTX exchange for strategic trading, or into Steaker’s withdrawal wallet, and even for high-interest lending and other arbitrage activities. Furthermore, the authorities discovered that Huang used the virtual currency transferred from the FTX exchange to pay employee salaries and operational expenses, attempting to obscure the flow of funds and conceal the proceeds of crime.
The prosecutors concluded that Huang Wei-Hsuan and his team’s capital protection and profit investment schemes raised funds from the public without approval from regulatory authorities, clearly violating the Banking Act. However, prosecutors also noted that before the FTX bankruptcy crisis, investors appeared to be able to withdraw their funds on time and track their digital assets at any time. Due to these factors, the prosecution initially assessed that while Huang and others may have committed fundraising-related offenses, their actions were not sufficient to be classified as fraud. It is estimated that from September 2019 to the end of 2022, the Steaker platform illegally raised approximately 1.48 billion New Taiwan dollars.
What happened to Steaker?
Steaker is a platform in Taiwan that provides digital asset allocation services, primarily assisting users in cryptocurrency investments. Its founder, Huang Wei-Hsuan, has had a longstanding relationship with Bitcoin since his time at the National Taiwan University in Computer Science.
This technical talent, known for his contributions to cryptocurrency wallet development and having served as a software engineer at Yahoo, became the vice president of Secret Silver Technology in 2018. In 2019, he founded the virtual currency asset management platform Steaker, offering users rapid and convenient digital asset allocation solutions, and created on-chain yields through “diversified composite products.” Steaker’s growth was astonishing, reaching a milestone of over 50 million USD in total client assets by October 2020, which established him as one of the most influential figures in Taiwan’s blockchain field.
Notably, the liquidity issues faced by the Steaker platform are closely related to the bankruptcy of the FTX exchange that occurred in November 2022. At that time, Steaker had as much as 10 million USD in assets held on FTX for trading, and FTX’s collapse resulted in these substantial funds being frozen, directly affecting Steaker’s ability to provide withdrawals to certain investors, leading to investor concerns and complaints.
In response to investor losses, Steaker proposed a three-phase compensation plan known as the “Dawn Project,” promising to do its best to compensate affected users. With the initiation of the repayment process by FTX, Steaker hopes to receive partial compensation and plans to maximize the reimbursement of user investments after deducting related costs.
Currently, the Taipei District Prosecutor’s Office has filed public prosecution against Huang Wei-Hsuan and three others for violations of the Banking Act, and SimTech will also face corresponding penalties. This case serves as a wake-up call for Taiwan’s virtual asset management industry and reminds investors to carefully assess risks while pursuing high returns and to pay attention to relevant legal regulations to avoid falling into illegal fundraising traps.
What does Steaker say?
Steaker issued a statement expressing deep disappointment regarding the indictment of its management team by prosecutors for violations of the Banking Act and Anti-Money Laundering Act, and it firmly clarified that there has been no illegal conduct.
“Steaker has never engaged in any illegal activities. From the preparatory phase, we consulted relevant legal professionals and confirmed the prevailing judicial interpretations at that time. We are concerned that subsequent differing judicial rulings may create significant legal uncertainties and harm for the startup industry.”
The statement emphasized that since its establishment, the company has sought legal counsel and adhered to the principles of legal operation, implementing various compliance measures in response to regulatory updates (such as the 2021 Anti-Money Laundering regulations for virtual currencies), including collaboration with compliance consultants, establishing a SAFU user asset security fund, submitting anti-money laundering declarations to the Financial Supervisory Commission, and upgrading KYC policies.
Regarding the indictment’s content, Steaker contended:
- Not involved in fraud-related charges: Steaker emphasized that prosecutors did not charge them with fraud, misappropriation, or breach of trust.
- Dispute over the applicability of the Banking Act: Steaker expressed regret over the prosecutors’ broad interpretation of the Banking Act to include virtual currencies, asserting that virtual assets are not legal tender and do not fall under the Banking Act’s regulations. Their business involves only virtual asset allocation and does not involve receiving fiat currency, thus should not violate the Banking Act.
- Denial of asset commingling: Steaker rebuffed the allegations of asset commingling, explaining that the establishment of dedicated sub-accounts (such as ENTRYONLY and exchange sub-accounts) was to clearly separate user funds from other accounts, which is a necessary business management arrangement and not an attempt to conceal cash flow or confuse assets.
- Never guaranteed profits or capital protection: Steaker stated that it has never promised users capital protection or guaranteed profits, and clearly disclosed the high risks of virtual asset investment at every stage (registration, subscription, contract), with the establishment of the SAFU fund aimed at addressing systemic risks rather than claiming zero risk.
Regarding the losses incurred by users due to the FTX collapse in 2022, Steaker views this as a force majeure systemic risk and has initiated the “Dawn Project” compensation plan, with over 86% of users participating. The company promises to continue executing compensation and has indefinitely suspended new business operations on the platform (such as plan subscriptions and new user registrations) since April 2023, although unaffected users can still withdraw their assets.
Steaker stated that it will work hard to clarify the facts in the litigation and hopes this case will promote discussions and transparency regarding the legal aspects of the virtual currency industry.