Investors Fail to Retrieve Cryptocurrencies Seized from Himalaya Exchange

News | March 20, 2024 By:

On Thursday, March 7, 2024, the United States District Court for the Southern District of New York denied a motion for the return of cryptocurrency funds that were seized as part of criminal proceedings against operators of the Himalaya Exchange.

The Himalaya Exchange is an online platform that allowed users to trade and store cryptocurrencies called Himalaya Dollar and Himalaya Coin. However, federal prosecutors allege that the exchange was used to carry out two fraud schemes orchestrated by defendants Ho Wan Kwok, Kin Ming Je, and Yanping Wang.

According to the indictment, between April 2021 and March 2023, Kwok and Je defrauded investors of over $262 million through false and misleading statements about the prospects and value of the exchange. Prosecutors claim the cryptocurrencies offered by Himalaya Exchange did not actually utilize blockchain technology and were instead used to enrich the defendants, their families, and associates.

After obtaining warrants, government agents seized several bank accounts linked to the exchange that contained investor funds. A total of 3,345 exchange users then filed a motion seeking the return of these seized cryptocurrency holdings. However, the court denied the motion, citing several reasons.

First, the court noted that under federal forfeiture laws, third parties cannot claim property subject to forfeiture after criminal charges have been brought. The only way to challenge such seizures is through ancillary forfeiture proceedings after the resolution of the criminal case.

Additionally, the court found that the government has a continuing legitimate interest in retaining the funds given their relevance to the fraud charges. The seizures were also conducted lawfully based on warrants. Prosecutors further stated their intent to preserve the funds to compensate victims.

Finally, the court believed it would be impractical to simultaneously consider the users’ claim alongside ongoing criminal proceedings against the defendants. With the motion denied, the seized Himalaya Exchange funds will remain under government control for now as the fraud case continues to be litigated in court.

Please contact BlockTribune for access to a copy of this filing.