What Happened?
The Steaker platform and its founder Huang Wei-Hsuan, among others, have been prosecuted by the Taipei District Prosecutors Office for illegally raising nearly NT$1.5 billion through a high-yield virtual currency investment scheme that promised capital protection and profit. The bankruptcy of the FTX exchange significantly impacted Steaker, leading to cash flow difficulties that prevented them from providing withdrawals to investors, which in turn prompted investor complaints and investigations by authorities.
Steaker Founder Indicted
Once hailed as a rising star in Taiwan’s blockchain industry, the digital asset management platform Steaker and its CEO Huang Wei-Hsuan have recently been formally indicted by the Taipei District Prosecutors Office on charges of violating the Banking Act. This case has not only shocked Taiwan’s cryptocurrency community but has also highlighted the potential legal risks in the virtual asset investment sector.
According to reports from the United Daily News, the investigation report concluded by the prosecutors indicated that the Steaker platform, operated by Seychelles-based company SimTech, launched several cryptocurrency investment schemes with annual interest rates ranging from 3.5% to 88% under the leadership of Huang Wei-Hsuan since September 2019, in collaboration with Chief Technology Officer Hsiu Min-Chieh, Chief Operating Officer Pan Yi-Ting, and Chief Marketing Officer Lu Tian-Xin. These schemes used “capital protection and profit” as bait to attract public investment in various mainstream cryptocurrencies, including Tether (USDT), USDC, BUSD, DAI, Ethereum (ETH), and Bitcoin (BTC).
The investigation revealed that the Steaker platform managed investor funds through personal accounts and a platform-co-managed wallet. Once the virtual currency in personal wallets accumulated to 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 subsequently instructed Hsiu to transfer these funds to their sub-accounts on the FTX exchange for strategic trading, or to Steaker’s withdrawal wallet, and even used them for high-interest lending and other arbitrage activities. Additionally, the prosecutors found that Huang utilized virtual currencies transferred from the FTX exchange to pay employee salaries and operational expenses, attempting to obscure the flow of funds and disguise the proceeds of crime.
After the investigation, the prosecutors concluded that the capital protection and profit investment schemes launched by Huang Wei-Hsuan and his team were soliciting funds from the public without the approval of the competent authority, clearly violating the Banking Act. However, prosecutors also noted that prior to the FTX bankruptcy crisis, investors appeared to be able to withdraw their funds on time and could track their digital assets at any time. For these reasons, the prosecutors initially determined that although Huang and others might have committed crimes related to illegal fundraising, their actions were not sufficient to be classified as fraud. The investigation estimates that from September 2019 to the end of 2022, the Steaker platform illegally raised approximately NT$1.48 billion.
What Happened to Steaker?
Steaker is a platform in Taiwan that provides digital asset allocation services, primarily assisting users in cryptocurrency investments. Founder Huang Wei-Hsuan has had a close relationship with Bitcoin since his studies in the Computer Science department at National Taiwan University.
This technical talent, who has made contributions in the field of cryptocurrency wallet development and once 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 quick and convenient digital asset allocation solutions while generating on-chain returns through “diversified composite products.” Steaker experienced rapid growth, reaching a milestone of over US$50 million in total customer assets by October 2020, which led him to be regarded as one of the most influential figures in Taiwan’s blockchain sector.
It is noteworthy that the cash flow issues at the Steaker platform are closely related to the bankruptcy of the FTX exchange that occurred in November 2022. At that time, Steaker had up to US$10 million worth of assets deposited on FTX for trading, and the collapse of FTX resulted in these substantial funds being frozen, directly impacting Steaker’s ability to provide withdrawals to certain investors, thereby raising investor concerns and complaints.
In response to investor losses, Steaker proposed a three-phase compensation plan named the “Dawn Plan,” promising to do their best to compensate affected users. With FTX initiating repayment procedures, Steaker hopes to receive partial compensation and plans to maximize user investment compensation after deducting relevant costs.
Currently, the Taipei District Prosecutors Office has filed public prosecution against Huang Wei-Hsuan and three others for violations of the Banking Act, and SimTech will also face corresponding fines. This case not only serves as a wake-up call for Taiwan’s virtual asset management industry but also reminds investors to carefully assess risks while pursuing high returns, and to pay attention to relevant legal regulations to avoid falling into the trap of illegal fundraising.
What Does Steaker Say?
Steaker has issued a statement regarding the prosecution of its management team by the prosecutors for violating the Banking Act and anti-money laundering laws, expressing deep disappointment and clarifying that they have committed no illegal acts.
“Steaker has never engaged in any illegal activities. From the preparation stage, we consulted relevant legal professionals and verified the prevailing court interpretations at that time. We do not welcome new court rulings that create great legal uncertainty and harm to new industries.”
The statement emphasizes that the company has consulted legal professionals since its inception, adhered to lawful operational principles, and adopted various compliance measures with regulatory updates (such as the 2021 Anti-Money Laundering Regulations for Virtual Currency), including collaborations with compliance consultants, establishing a SAFU user asset safety fund, submitting anti-money laundering declarations to the Financial Supervisory Commission, and upgrading KYC policies.
In response to the indictment, Steaker refuted the following:
- No Involvement in Fraud: Steaker emphasized that the prosecutors did not charge them with fraud, embezzlement, or breach of trust.
- Disputes Over the Applicability of the Banking Act: Steaker expressed regret over the prosecutors’ broad interpretation of the Banking Act to include virtual currencies and their determination of “illegal receipt of deposits.” They argue that virtual assets are not legal tender and do not fall under the regulatory scope of the Banking Act; their business solely involves virtual asset allocation without receiving fiat currency, thus should not violate the Banking Act.
- Denial of Asset Mixing: Steaker refuted the allegations of asset mixing, explaining that the establishment of dedicated sub-accounts (such as ENTRYONLY and exchange sub-accounts) is necessary for clearly distinguishing user funds from other accounting matters, which is an essential business management arrangement, not an attempt to obscure cash flow or confuse assets.
- No Guarantee of Profit or Capital Protection: Steaker stated that they have never made promises of capital protection or guaranteed profits to users, and have explicitly disclosed the high risks of virtual asset investment at every stage (registration, subscription, contracts). The establishment of the SAFU fund is also intended to address systemic risks, not to claim risk-free investment.
Regarding the user losses caused by the collapse of FTX in 2022, Steaker views it as a force majeure systemic risk and has initiated the “Dawn Plan” compensation scheme, with over 86% of users participating. The company promises to continue executing compensation and has indefinitely halted new business on the platform (such as plan subscriptions and new user registrations) since April 2023, but unaffected users can still withdraw their assets.
Steaker stated that they will strive to clarify the facts in the litigation and hope that this case can promote discussions and transparency regarding the legal aspects of the virtual currency industry.