XREX Founders Huang Yao-wen and Xiao Hui-zong Approved for Deferred Prosecution by Prosecutors

Cryptocurrency Exchange XREX (Lian Ke Co., Ltd.) recently publicly released a full statement approved by the Taichung District Prosecutors Office, providing detailed clarification regarding the decision to defer prosecution of co-founders Huang Yao-wen and Xiao Hui-zong. According to prosecutors’ assessment, although their cross-chain operations involved legal gray areas, they did not have profit motives and actively cooperated with investigations, leading to a decision of deferred prosecution.

Cross-Chain Operations Trigger Judicial Recognition

The incident occurred in early 2023, when Huang Yao-wen and Xiao Hui-zong of XREX assisted a client who had passed KYC verification in transferring tokens. Specifically, the founders transferred USDT tokens from the client’s personal wallet on the Tron chain (TRC-20 standard) to the Ethereum chain (ERC-20 standard) and sent them to a designated address.

This operation appeared to be routine service, but months later it faced scrutiny. The client was investigated by judicial authorities for suspected illegal fund sources, which implicated XREX’s founders. The Taichung District Prosecutors Office determined that the procedures used by Huang Yao-wen and Xiao Hui-zong exceeded normal standards and violated relevant laws, constituting illegal conduct.

Prosecutors Consider Four Major Factors in Their Decision

Despite the illegal facts, prosecutors did not directly indict Huang Yao-wen and Xiao Hui-zong. Instead, after considering multiple factors, they decided on deferred prosecution. The key considerations included:

First, both founders have no prior criminal records. Second, they did not gain any substantial benefits from the operations involved; they acted solely at the client’s request. Third, XREX actively cooperated with law enforcement by freezing the Bitcoin assets involved, with a total of 30 BTC seized by authorities. Fourth, Huang Yao-wen and Xiao Hui-zong have long been committed to anti-fraud efforts in the cryptocurrency industry, demonstrating their contribution to industry order.

Based on these factors, prosecutors agreed to a deferred prosecution for one year.

Conditional Deferred Prosecution and Public Service Commitment

Deferred prosecution is not unconditional exemption. Huang Yao-wen and Xiao Hui-zong are required to fulfill several obligations. They must each pay public welfare donations to the national treasury, produce anti-fraud awareness videos for use by law enforcement agencies, and provide cryptocurrency-related courses to police education or law enforcement training units, thereby deepening their support and cooperation in anti-money laundering efforts.

The probation period concluded in early 2024, and both founders of XREX have completed the relevant legal procedures.

XREX’s Future Commitment to Strengthen Compliance

XREX states that since its founding, it has been dedicated to establishing a compliant and secure cryptocurrency trading environment and actively cooperating with government policies to combat fraud. Although this incident involved unintentional involvement due to client misconduct, it has served as a profound warning to the entire company.

XREX promises to continue cooperating with government agencies to fight scams, strictly follow regulatory requirements, and further strengthen internal compliance mechanisms to ensure the exchange plays a responsible role in the cryptocurrency market. This event also serves as an important lesson for XREX’s founders and team, driving ongoing improvements in fraud prevention and security construction.