Mine Digital Former CEO Faces Criminal Charges Over $1.5 Million Missing Bitcoin Funds

TLDR:

• Former Mine Digital CEO Grant Colthup charged with $1.47M fraud
• Customer paid money for Bitcoin but never received any crypto
• Funds allegedly used for company liabilities and other customers’ crypto purchases
• Mine Digital collapsed in September 2022 with $16M in creditor claims
• Case adjourned to December 16, with potential 20-year prison sentence if convicted

Australian authorities have charged Grant Colthup, the former CEO of cryptocurrency exchange Mine Digital, with fraud over the alleged misappropriation of $1.47 million (2.2 million Australian dollars) in customer funds intended for a Bitcoin purchase.

The Australian Securities and Investments Commission (ASIC) announced the charges on October 21, 2024, following an investigation into activities at Mine Digital’s parent company, ACCE Australia.

According to ASIC’s statement, a customer transferred $1.47 million to ACCE Australia with the intention of purchasing Bitcoin. However, the customer never received the cryptocurrency they paid for.

Investigators allege that Colthup redirected the customer’s funds to cover ACCE’s existing financial obligations and to purchase cryptocurrency for other clients instead of fulfilling the original transaction.

Following an ASIC investigation, the ex-CEO of crypto exchange Mine Digital has been charged with fraud in connection with a $2.2 million transaction https://t.co/tHrFgaHiSD

— ASIC Media (@asicmedia) October 21, 2024

The incident occurred during Mine Digital’s active operation period, which ran from May 2019 to September 2022. During this time, the company operated as a digital asset exchange platform, offering various cryptocurrency trading services to Australian customers.

The timing of the alleged fraud is particularly significant, as it took place when Bitcoin’s value ranged between $18,890 and $24,580. At current Bitcoin prices of approximately $67,460, the customer’s intended investment would now be worth between $4 million and $5.24 million.

The fraud charge was formally presented at the Magistrates Court in Ipswich, Queensland. The court has scheduled the next hearing for December 16, 2024.

If found guilty under section 408C of Queensland’s Criminal Code 1899, Colthup could face a maximum prison sentence of 20 years.

The legal proceedings against Colthup represent the latest development in the ongoing aftermath of Mine Digital’s collapse in September 2022. When the platform ceased operations, creditors were left seeking to recover approximately $16 million in total claims.

During initial investigations following the company’s collapse, administrators discovered only $20,000 in assets under ACCE’s control, a fraction of the millions claimed by creditors.

PKF’s business recovery and insolvency partner, Brad Tonks, was appointed as ACCE’s liquidator on December 1, 2022, roughly two months after the platform’s collapse.

In January 2023, PKF reportedly considered legal action against Colthup, seeking court orders to compel him to compensate creditors for their losses.

The case has drawn significant attention from Australia’s financial regulators, who have intensified their scrutiny of cryptocurrency exchanges operating within the country.

ASIC’s investigation revealed that Mine Digital operated its exchange platform and provided cryptocurrency trading services to customers for over three years before its eventual collapse.

The alleged fraud has highlighted concerns about customer fund security in cryptocurrency exchanges, particularly in cases where traditional banking safeguards may not apply.

According to court documents, the transaction in question occurred just months before Mine Digital’s collapse, during a period of significant market volatility in the cryptocurrency sector.

Currently, liquidators continue their efforts to recover assets and provide relief to affected creditors, while criminal proceedings against Colthup move forward.

The former CEO appeared at the initial court hearing in Ipswich, where the case was adjourned to allow for further legal preparations.

ASIC confirms that their investigation into the matter remains ongoing, with the possibility of additional findings as the case progresses through the legal system.

The most recent development in the case is the October 21 court appearance, where the December 16 hearing date was set.