Updated on June 2, 2025: XREX Exchange Issues Statement Regarding the Deferred Prosecution of Founders Huang Yaowen and Xiao Huizong
Chain Technology Co., Ltd. (XREX Exchange) released a statement on June 2, 2025, explaining the deferred prosecution of its founders Huang Yaowen and Xiao Huizong, who were involved in a case concerning client funds suspected of illegal activities, as decided by the Taichung District Prosecutor’s Office.
The statement indicated that this incident originated in early January 2023, when Huang Yaowen and Xiao Huizong facilitated a KYC-approved client’s request to convert TRC-20 USDT from their personal wallet to ERC-20 USDT and transfer it to a designated wallet address. Months later, the client was investigated by judicial authorities due to suspected illegal sources of funds.
The Taichung District Prosecutor’s Office determined that while Huang Yaowen and Xiao Huizong’s chain conversion actions were not standard operating procedures and posed risks of violating relevant laws, both individuals had no prior criminal records and did not derive any substantial profit from this case.
Additionally, XREX had actively assisted judicial authorities in seizing 30 bitcoins from the client’s wallet at XREX Exchange and highlighted the long-term efforts of Huang Yaowen and Xiao Huizong in combating cryptocurrency fraud.
Based on these considerations, the Taichung District Prosecutor’s Office consented to grant deferred prosecution to Huang Yaowen and Xiao Huizong, with a deferral period of one year. Both individuals are required to pay public donations to the treasury and comply with anti-money laundering measures, including creating promotional videos and providing cryptocurrency introductory courses to law enforcement or educational institutions.
XREX emphasized in the statement that since its inception, the company has always been committed to establishing a compliant and secure cryptocurrency market environment, actively cooperating with government policies, and fully assisting in the fight against fraud. Although this incident was a consequence of being implicated in a case involving a client suspected of illegal activities without prior knowledge, XREX takes this matter seriously as a cautionary lesson.
Founders Huang Yaowen and Xiao Huizong also expressed their gratitude on Facebook for the deferred prosecution decision by the Taichung District Prosecutor’s Office, reiterating that XREX will never associate with fraud groups or money laundering entities.
Huang Yaowen noted that although the resolution of this case is not ideal, considering all factors, it marks an important conclusion. He emphasized that XREX will steadfastly continue on a path of integrity, compliance, and safety, adhering to regulations, strictly self-regulating, and making greater contributions in public-private cooperation.
What Happened?
XREX CEO Huang Yaowen and CFO Xiao Huizong were found by the Taichung District Prosecutor’s Office to have allegedly assisted the “Afu Wallet” fraud group in conducting cross-chain conversions of approximately NT$410 million (12.7 million USDT) in Tether, helping the fraud group conceal the flow of illicit funds.
The prosecutors considered that Xiao Huizong and Huang Yaowen admitted to their wrongdoing, had no criminal records, and cooperated in the investigation, leading to the decision for deferred prosecution. However, the deferred prosecution comes with additional conditions, including a payment of NT$8 million to the treasury and conducting anti-fraud and anti-money laundering advocacy on the XREX platform.
During the investigation of the “Afu Wallet” money laundering case, it was discovered that in the course of tracing the fraud group’s data, a leak of police inquiry transcripts was found, leading to the questioning of XREX investigator Chen Meihui and her police officer boyfriend. Shortly after being questioned, Chen Meihui tragically died in a car accident, resulting in the prosecutors ultimately deciding not to prosecute her due to her death.
Founders Involved in Cryptocurrency Money Laundering Granted Deferred Prosecution
At the end of 2024, XREX’s financial crime investigator Chen Meihui unfortunately died in a car accident, drawing significant public attention. This tragedy later implicated the company’s two founders, Huang Yaowen and Xiao Huizong, in a large-scale virtual currency fraud case involving the “Afu Wallet” money laundering controversy.
The Taichung District Prosecutor’s Office discovered that the two had assisted the fraud group in conducting cross-chain operations involving up to NT$410 million in cryptocurrency. Considering their confessions and cooperation during the investigation, the prosecutors ultimately granted deferred prosecution, but with conditions for a hefty fine and the promotion of anti-fraud advocacy.
The “Afu Wallet” Case Uncovered XREX Executives, Money Laundering Involves Cross-Chain Operations
This case originated from the Taichung District Prosecutor’s Office investigating the “Afu Wallet” app created by ACE Company, which is suspected of fraud and money laundering exceeding NT$300 million.
According to reports from United Daily News, investigators discovered that the fraud group employed cross-chain methods using cryptocurrency to conceal the flow of funds. Further investigation revealed that a defendant surnamed Xu had contacted XREX co-founder Xiao Huizong in January 2023, requesting assistance to convert a large amount of Tether (USDT) from the TRON chain to the Ethereum chain.
Investigators found that Xiao Huizong and XREX co-founder Huang Yaowen, as professionals in the blockchain and cryptocurrency fields, should have been aware that providing large-scale cross-chain services for others was not part of the company’s normal business operations and posed risks of concealing criminal funds.
However, after discussions, the two decided to cooperate, hoping to develop a market for over-the-counter (OTC) and cross-border currency exchanges through such large transactions to expand XREX’s business.
Without thoroughly confirming the legality of the fund sources, Xiao Huizong used his and his wife’s Binance accounts to assist the defendant surnamed Xu with the chain conversion operations. According to investigations, on January 10, 2023, Xiao Huizong conducted a total of 27 transactions through his account in just one day, successfully converting a total of 12.7 million USDT (valued at approximately NT$410 million at that time) from the TRON chain to the Ethereum chain and transferring the funds to the designated wallet.
The prosecutors have obtained complete transaction records, account data, and relevant testimonies, concluding that the two are suspected of money laundering activities.
Founders Admit Guilt, Granted Deferred Prosecution with Required Fines and Advocacy Promotion
During questioning, both Xiao Huizong and Huang Yaowen admitted their wrongdoing. The prosecutors considered that both had no prior records and that XREX had previously cooperated with judicial authorities to seize 30 bitcoins from the defendant surnamed Xu, actively participating in the investigation. They deemed the criminal circumstances of the two to be relatively straightforward, thus agreeing to grant them deferred prosecution.
However, this deferred prosecution comes with stringent conditions: Xiao Huizong is required to pay NT$5 million to the treasury, while Huang Yaowen must pay NT$3 million.
In addition, both are required to publish two anti-fraud and anti-money laundering promotional videos of at least five minutes each on the official XREX website and jointly provide 40 hours of basic cryptocurrency knowledge courses for use by judicial authorities or law enforcement educational institutions.
The Car Accident of Chen Meihui Also Involved, Non-Prosecution Due to Death
It is noteworthy that the investigation of this money laundering case inadvertently involved the tragic car accident that led to the death of Chen Meihui at the end of last year.
During the investigation of the Afu Wallet case, prosecutors discovered several complete police inquiry transcripts from fraud victims in the cloud data of the money laundering accomplices. To clarify whether the source of the transcripts involved a leak, on December 3 of last year, they questioned Chen Meihui, her boyfriend who worked as a police officer, and four others including Xiao Huizong and Huang Yaowen, listing them as defendants.
After being questioned, Chen Meihui and her boyfriend took an Uber back north the following night (December 4) and unfortunately encountered a serious car accident on Hsinchu Road, resulting in Chen Meihui suffering fatal injuries. Chen Meihui had made significant contributions in tracing illegal cash flows, having assisted in notable cases such as “Creative Private Rooms,” “88 Club,” and Cambodian fraud, and her unexpected death led to speculation about conspiracy theories in society.
Regarding the leak and violation of personal data laws, the prosecutors found the police officer surnamed Xie to be suspicious but also granted deferred prosecution. As Chen Meihui had passed away, according to criminal procedure law, she was granted a non-prosecution disposition.
What is Deferred Prosecution? What Does It Mean?
“Deferred prosecution” (officially termed “deferred prosecution disposition”) is a system in Taiwan’s Criminal Procedure Law, primarily stipulated in Article 253-1.
In simple terms, deferred prosecution means:
The prosecutor, after investigation, believes that the defendant’s criminal suspicion is clear, and the evidence is sufficient to support prosecution. However, considering the specific circumstances of the case, the defendant’s character, attitude after the crime, severity of the crime, prior records, and willingness to compensate the victim, the prosecutor concludes that even without temporarily sending the defendant to court for trial, the goals of maintaining order or promoting the defendant’s reformation can still be achieved.
The prosecutor will issue a deferred prosecution disposition document to the defendant, specifying a particular deferral period (usually 1 to 5 years) and possibly attaching some conditions that require the defendant to comply or fulfill during the deferral period. If the defendant adheres to the provisions of the disposition document, fulfills the additional conditions, and is not found to have committed new crimes or violated other important regulations during the deferral period, upon its expiration, if the prosecutor does not revoke the deferred prosecution disposition, it will have the same effect as a non-prosecution disposition.
This means that the defendant’s case is concluded and will not enter the court trial process, leaving no criminal judgment record (though in specific circumstances, records of deferred prosecution may still be discoverable).
XREX Responds: Deferred Prosecution Does Not Affect Founders’ Qualifications or Company Operations
In response to the results of this case, XREX quickly provided a legal opinion within the community, stating that the results of the investigation involving the two founders leading to deferred prosecution.
According to the lawyer’s opinion, if the deferred prosecution period expires without revocation, its legal effect is equivalent to a “non-prosecution disposition,” which does not affect the qualifications of serving as company managers, directors, or responsible persons, nor does it affect the company’s continued operations as a Virtual Asset Service Provider (VASP).
Thus, upon the lawyer’s advice, the two founders accepted the prosecutor’s proposal for deferred prosecution and are awaiting the formal written notice.
