From a fleeing Chinese tycoon to a Trump adviser, and an intention to transform the world’s financial system, here’s the tale of HCoin, the digital currency that has raked in millions from everyday people but sent alarm bells ringing for financial crimes and blockchain specialists.
Background: Who Is Behind HCoin?
The Key Players
- Guo Wengui: A fugitive Chinese billionaire and founder of the Whistleblower Movement, an anti-Chinese Communist Party (CCP) organisation. Guo claims HCoin will one day replace the Chinese renminbi and help dismantle Beijing’s government.
- Steve Bannon: Former Trump adviser and co-founder (with Guo) of the New Federal State of China (NFSC), a self-described “government in exile” established on June 4, 2020. Bannon publicly called the HCoin project “monumental.”
- William Je: Hong Kong businessman and founder of Himalaya Exchange, the platform on which HCoin is exclusively traded. Guo has described Je as “the money man” in US court documents.
The Political Mission Behind the Coin
Guo and Bannon founded the NFSC with the stated goal of replacing the CCP. In February, Guo reiterated that HCoin would be central to this mission:
- He claimed HCoin would attract Chinese citizens’ wealth away from the renminbi.
- The Whistleblower Movement has a precedent for participating in smear campaigns against US President Joe Biden during the COVID-19 pandemic period.
- This group is also known to harass those who criticize it.
How the Investment Scheme Works?
A Real Investor’s Experience
Lisa Chen is an immigrant from China who moved to Australia. She started investing in HCoin back in April last year. Here is how the investment scheme works based on Lisa’s experience:
- Lisa managed to invest almost AUD $20,000 worth of her savings because she was impressed by Guo’s idea behind HCoin.
- She urged her family members to do the same because she thought that she was fighting for justice.
- Unlike in other cryptocurrency schemes, where token purchase occurs via exchanges, she had to send money directly to offshore accounts.rencies — she was instructed to make direct bank transfers to overseas accounts.
- Bank records showed her funds were sent to accounts in the Bahamas and the US, the latter under the name Himalaya International Clearing.
Unusual Purchase Process and Restrictive Agreements
Australian investors were, in some cases, required to sign an agreement that:
- Prohibited them from taking any action that “could potentially hurt or damage the reputation of the Exchange.”
- Effectively silenced investors from speaking out about concerns.
Red Flags: What Experts Found?
Unsubstantiated Valuations
The advocates of HCoin insist that its valuation has surpassed US$43 billion, making it one of the top ten cryptocurrencies worldwide, ahead of well-known cryptocurrencies such as Ripple XRP. The experts find no reason to believe this claim:
- HCoin can only be traded on Himalaya Exchange, meaning its claimed value cannot be independently verified on any major platform.
- Lawyer and blockchain specialist Dr Aaron Lane called the valuation “completely unbelievable,” noting it has the “hallmarks of a cryptocurrency scam.”
- Researchers at the social media analysis group SMAT located blockchain addresses for HCoin but found no evidence of regular trading.
Lack of Transparency
George Andreopoulos, an expert in cryptocurrency crimes, has analyzed the white paper of HCoin and found several issues in terms of a lack of transparency:
- No details about the individuals who stand behind the initiative.
- No organizations declared to be involved in the backing or financing of HCoin.
- No disclosure of the token’s distribution plan.
- The exchange’s website does not provide blockchain contract information for HCoin.
- Himalaya Exchange has made no mention of its relationship with Guo Wengui on its website.
Disputed Third-Party Verification
- According to HCoin’s white paper, its smart contract had been verified by blockchain security firm Certik, which serves as proof of authenticity.
- Certik stated to ABC that HCoin is not one of their projects.
- The Himalaya Exchange has denied this, stating that it has “relevant documentation,” but did not show it.
Warning from Regulators and Legal Considerations
Alerts Issued by International Regulators
Himalaya Exchange has drawn the interest of financial regulators in several nations:
- New Zealand (FMA): Himalaya Exchange is not a registered financial service provider. The FMA suggests you be “cautious in your dealings with this organization.”
- Bahamas (SCB): The SCB started its investigation in January 2022 with the objective of finding out whether there were any “registrable/licensable or illegal activities” related to the exchange.
- British Columbia, Canada: Warnings have been issued regarding the non-existence of a license or recognition for the platform.
Guo’s Past History with the SEC
It is not the first encounter of Guo with financial regulators:
- Previously, his schemes have been investigated by the United States Securities and Exchange Commission, resulting in a settlement of more than $539 million.
- Guo filed for bankruptcy in Connecticut in February, claiming less than US$100,000 in assets — despite his movement boasting of billions in cryptocurrency value.
Australia: AUSTRAC Registration vs. Investor Protection
Himalaya Currency Clearing (HCC), a business associated with Himalaya Exchange, is licensed by AUSTRAC in Australia as a digital currency exchange and as a money remitter. However:
- AUSTRAC registration subjects the company to anti-money laundering laws.
- This registration does not guarantee investor protection, according to cryptocurrency crime experts.
Consequences for Investors Who Speak Out
Fear and Retaliation
- When Lisa Chen raised concerns in a Discord chatroom used by Australian NFSC members, she was labelled a “CCP agent” and lost access to her Himalaya Exchange account.
- She feels that there are many other investors who have suffered greater losses than her and who would be too scared to come out because of the intimidating nature of the movement.
Seeking Recourse
- In her search for redress, Chen reached out to Australia’s National Australia Bank (NAB). It was determined that the transfer could not be undone because the institutions involved were unwilling to refund the money.
- She had more success contacting the offshore banks directly and was refunded most of her investment.
- Chen now urges Australian authorities and banks to take action on the fraudulent scheme.
Key Takeaways
- The currency, known as HCoin, is a product of the political campaign of Guo Wengui and is only available for trading at the unregulated Himalaya Exchange.
- The experts characterize the operation as a “cryptocurrency scam” based on unverified valuations, ownership, and auditing.
- Financial authorities in New Zealand, the Bahamas, and British Columbia have issued warnings regarding Himalaya Exchange.
- Those investors who questioned the campaign have been threatened within the organization.
- Guo Wengui, Steve Bannon, and William Je did not respond to interview requests or detailed questions from the ABC.