Just Before Bankruptcy, This Crypto Exchange's CEO Allegedly Used Money Deposited By Customers To Buy Bitcoin To Pay Off Company's Debts

Australia’s financial market regulator charged the former CEO of a defunct cryptocurrency exchange for embezzling $1.47 million that a customer had sent to buy Bitcoin BTC/USD.

What Happened: In a press release shared Tuesday, the Australian Securities and Investments Commission (ASIC) stated that Grant Colthup, the ex-CEO of Mine Digital, allegedly used the funds to pay off the liabilities of the parent company, ACCE Australia Pty Ltd, or buy cryptocurrencies for others, or both.

The customer deposited the funds but never received the promised Bitcoin, the press release read. The incident occurred just two months before Mine Digital went bankrupt in September 2022.

Colthup was notified of the fraud charge at a hearing at the Magistrates Court in Ipswich, Queensland, Australia, on Oct. 21, and the case was adjourned to Dec. 16.

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Why It Matters: Mine Digital operated a cryptocurrency exchange platform and offered various trading services between May 2019 and September 2022—when it entered bankruptcy and its control transferred to external administrators, following a lawsuit alleging that it did not do enough to remove scammers from its site.

Colthup was charged under section 408C of Queensland's Criminal Code 1899, which carries a maximum prison sentence of 20 years.

During July 2022, Bitcoin oscillated between $19,269 and $23,336. With the price of one BTC at $66,796.96 as of this writing, the unlucky customer’s holdings might have been in the range of $4.20 million-$5.09 million today.

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