ACE, one of Taiwan’s three major cryptocurrency exchanges, has been facing difficulties in its operations due to the involvement of its CEO, Wang Chenhuan, in a garbage coin fraud case. In order to resolve issues related to business operations and salary payments, CEO Wang Huxu recently applied to the court for the appointment of a temporary administrator. However, the court rejected the application as the issues raised did not meet the legal criteria for board incapacity, and the salary payment issue could be handled by the company itself.
Earlier this year in January, ACE, a Taiwanese cryptocurrency exchange, was hit by a garbage coin fraud case involving its top management. Currently, all 11 individuals implicated in the case, including ACE co-founder and former chairman Pan Yizhang, and current CEO Wang Chenhuan, are under detention and unable to meet anyone.
Recently, news spread within the cryptocurrency community that the court rejected ACE’s application for the appointment of a temporary administrator, as stated in the court’s judgment. This news has sparked rumors that ACE’s operations are facing significant challenges.
According to the court’s judgment, Wang Chenhuan, as the company’s sole director and shareholder, is unable to operate the company due to his detention, which has led to business disruptions such as the inability to make decisions, difficulties with external endorsements, business interruptions, inability to transfer funds in and out of banks, and failure to pay employee salaries and operating expenses.
This application was ultimately rejected by the Taipei District Court. The court stated that the appointment of a temporary administrator is based on the condition of “board incapacity”, which causes damage to company operations and affects shareholders’ rights and must involve specific matters that require the board’s personal handling in an urgent and immediate manner.
The court rejected the application for several reasons. Firstly, the financial issues raised by Wang Huxu did not reach the threshold that required board approval (more than NT$300,000) and did not raise concerns about daily operations. Secondly, Wang Huxu, as the CEO, claimed to have handled the monthly salaries and bonuses of over NT$2 million, which were also approved by him.
Finally, the court explained that Wang Huxu’s reason for the salary issue was that employee salaries came from transaction fee revenues. However, due to Wang Chenhuan’s involvement in criminal cases, the cooperating bank (Cathay United Bank) expressed concerns about the source of transaction fees, which restricted fund transfers and resulted in delayed salary payments. This situation indicates that if ACE has any salary payment issues, they are primarily caused by the bank’s concerns about the source of transaction fees, rather than board incapacity. There is no direct correlation with the board’s ability to exercise its powers.
In summary, although the company’s CEO Wang Chenhuan has been detained, Wang Huxu failed to prove that ACE’s physical operations were unable to operate or damaged as a result. Therefore, the court deemed it unnecessary to appoint a temporary administrator, as it does not align with the intention of the Company Law.
Furthermore, the court’s judgment clearly stated that it is aware that Cathay United Bank has frozen ACE’s funds, which are the transaction fee income. User funds should be kept separate and secure, and there should be no immediate concerns. However, if users are worried about the safety of their assets, they can consider transferring or withdrawing their funds to reduce risks.
Due to conflicting statements from different cryptocurrency communities, DooArea asked ACE whether the situation described in the original application, where the company was unable to make decisions, faced difficulties with external endorsements, experienced business interruptions, had restrictions on fund transfers in and out of banks, and was unable to pay employee salaries and operating expenses, is true or not.
ACE responded that the company’s internal finances and operations are all normal, and the application was made solely to exercise rights, in order to protect the rights of users and employees, and is unrelated to the company’s financial situation.