BitGo Executive Testifies on ‘Financial Crime Red Flags’ at Guo’s Himalaya Exchange

News | June 28, 2024 By:

On Friday, June 14, 2024, Sam Roberts, BitGo’s head of financial intelligence, testified in the Manhattan federal court trial of Chinese dissident Miles Guo. Roberts told jurors that his compliance team identified multiple “financial crime red flags” in their investigation of the Himalaya Exchange, a cryptocurrency platform promoted by Guo.

Roberts explained that BitGo began storing cryptocurrency assets and providing wallet services for the Himalaya Exchange in 2021. However, his compliance team launched a probe in late 2022 after receiving a government subpoena related to Guo’s activities.

The investigation uncovered unusual features of the exchange, according to Roberts. He said the Himalaya Exchange operated as a “closed-loop system,” only allowing customers to purchase its H-Coin and H-Dollar tokens with fiat currency on the exchange itself. Moreover, users were unable to withdraw or trade the crypto tokens on other platforms.

“The exchange appeared to operate in a way that I find abnormal. There was very, very little corresponding blockchain activity,” Roberts testified.

Roberts informed the court that the compliance investigation escalated following Guo’s arrest in March 2023 on charges including fraud and money laundering. BitGo eventually terminated its relationship with the Himalaya Exchange that following summer due to identified “financial crime red flags” that could not be mitigated.

Guo’s defense attorney, Scott Schirick of Alston & Bird LLP, cross-examined Roberts and pointed out the H-Dollar’s 2021 white paper disclosed tokens would only be tradable within the exchange ecosystem.

Schirick also elicited an agreement from Roberts that centralized exchanges like Coinbase normally conduct internal wallet transactions without corresponding blockchain activity.

However, Assistant U.S. Attorney Justin Horton highlighted on redirect that Coinbase offers numerous tradable tokens and allows crypto deposits and withdrawals, distinguishing it from the “significantly different” Himalaya Exchange.

Guo, also known as Ho Wan Kwok, has been on trial for over three weeks and faces charges including wire fraud and money laundering for allegedly stealing over $1 billion from investors. Witnesses have testified to being misled by Guo into worthless business ventures supporting his anti-Communist Party movement.

The trial is expected to continue through mid-July.

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