Himalaya Exchange Legal Action Against the DoJ Behalf of Customers

DoJ’s Jurisdictional Overreach, placing customers in danger, and Trustee Despins’ unjustified interference and astronomical legal fees claimed to date all causing huge distress

FormerFeds, a distinguished provider of corporate defense and litigation services, has issued a detailed response to the U.S. Department of Justice (DoJ) in the case of United States v. Miles Kwok and seizing over $302 million in investments in Himalaya Exchange from over 3,500 innocent customers.

The Department of Justice’s (DoJ) decision to convert these funds into U.S. Treasury funds has raised serious alarms. This action not only casts doubt on the integrity of the legal process but also threatens a substantial financial loss, estimated to be around $329.7 million.

The seizure has already devalued the clients’ Himalaya Coin holdings by $136 million, This significant devaluation, coupled with the DoJ’s apparent disregard for the repercussions, underscores a critical oversight that could lead to irreparable harm to the clients’ financial interests, especially if the reserves of the Himalaya Dollar stable coin are not restored.

Bradford L. Geyer, Esq – who represents 3,539 clients of Himalaya Exchange, a substantial number of whom are expatriate Chinese dissidents advocating for democracy and freedom – stated: “Himalaya Exchange is a platform that is very popular with the global expat Chinese community for its staunch commitment to independence and robust data privacy, offering a critical alternative amid the CCP’s pervasive influence. Their stance has placed them in the crosshairs of the Chinese Communist Party, making them targets of the CCP’s aggressive repression campaigns disregarding human rights and international law.”

“The ordeal my clients face is monumental. They have been subjected to immense psychological and financial distress, caused not only by the CCP but now exacerbated by the actions of the DoJ. Thousands of people have come forth and many have shared heart-breaking stories with me personally about how the asset seizure has affected them.

He continued: “The Department of Justice, despite being well-informed of China’s systematic efforts to silence dissenting voices—even coining the term “transnational repression” and recently charging 40 officers of China’s National Police on American soil for such acts—nonetheless proceeded with an asset seizure that has severely impacted an already vulnerable group of pro-democracy advocates who lack the safeguard of U.S. citizenship.”

Bradford L. Geyer, Esq has highlighted several critical issues in relation to the DoJ case as follows:

Undermining international sovereignty

The indictment presented to the Court primarily concerns actions by individuals Kwok and Je. Meanwhile, the Himalaya Exchange, operating in the British Virgin Islands (BVI)—a nation independent since the mid-1800s—clearly falls outside U.S. jurisdiction. Despite America’s history of respecting the sovereignty of smaller nations like the BVI, as outlined in treaties like the Caribbean Basin Initiative, this unusual step of targeting a foreign company legally operating beyond U.S. boundaries raises suspicions about the DoJ’s underlying motives. The tactics employed by the DoJ not only challenge international legal norms but also raise serious concerns about the ethical conduct of the DoJ’s practices.

The situation at hand extends far beyond simple overreach; it reflects a profound abuse of power, marked by predatory actions driven by financial interests. This troubling pattern is starkly visible in the management of the seized funds.

Customer Authenticity

Following a motion for the return of the seized property, the DoJ questioned the victims’ authenticity and argued against the appropriateness of asset return, further complicating the situation.

The Department of Justice (DoJ) and the Bankruptcy Trustee for Kwok, who has no legitimate claim or proper basis to intervene in the seizures in the criminal case, implied that customers involved in the Himalaya Exchange case are fictitious by suggesting they are “purported Customers” without any evidence to support their claim. This approach, viewed as an effort to control funds rather than safeguard actual victims, is marred by unwarranted legal tactics. Such manoeuvres, designed to undermine genuine victims, and divert attention from the key matter at hand.

In response, the Himalaya Exchange has engaged an independent legal firm to oversee the selection of a forensic accounting firm. This firm is tasked with conducting an audit to validate the authenticity of the Himalaya Customers. The objective of this audit is to definitively confirm the existence of these customers in the Himalaya Exchange’s database.

Costs

In the concurrent Miles Guo Chapter 11 bankruptcy case, Trustee Luc Despins’ conduct has raised serious ethical red flags as he attempts to orchestrate a plan to funnel seized Himalaya Exchange funds into Guo’s estate.

This strategy hinges on establishing that these funds, or the Himalaya Exchange itself, are Guo’s property. Despins is aggressively targeting the Himalaya Dollar reserve funds held on trust for its customers, valued at $302 million, which exclusively contains customer funds held in trust, blatantly disregarding the fact that it holds no assets belonging to Guo.

Despite the DoJ not recognizing the Himalaya Exchange as belonging to Miles Guo, Despins in an unrelated hearing in the Bankruptcy Court gave indications to the Judge he aimed to control these funds and inflate the estate’s total assets to over $630 million. Astonishingly, the DoJ, known for its tight grip on seized assets, is allowing Despins to run rampant during a live criminal trial, where asset retention is contingent on a finding of guilt.

Despins’ conduct during the August 29th court proceedings paints a disturbing picture of a trustee motivated by greed rather than a commitment to justice or ethics. His ambiguous stance on defining “victims” and who can make claims and his audacious bid for dual roles in both the bankruptcy and the DoJ’s criminal case, where he has no direct involvement, highlight behaviour that not only blurs ethical lines but also creates a glaring conflict of interest, raising serious concerns to the justice and fairness owed to the known victims of this case.

Despins’ collaboration with the DoJ in this case is further evidenced by his involvement in the proposed sale of a multimillion-dollar mansion. Addressing the delay in the Miles Guo case starting in April he stated, “we’re really concerned about this very valuable asset being left in limbo for lack of a better word”. Justifying his million-dollar fee for the sale, he stated, “we came in with the deemed expense of a million dollars,” a transaction that received the DoJ’s nod. This position, taken prior to any legal verdict or guilt determination, lays bare the true motivations at play, more than a blatant money grab, it’s government-sanctioned theft.

Moreover, Despins is ‘churning’ fees and has already claimed an exorbitant $21 million in legal fees from the estate. Such tactics not only escalate legal costs but, crucially, impose these costs on the victims themselves. This situation highlights a grave concern where the interests and financial well-being of the victims are being overshadowed by a profit-driven agenda. Concerns are that the victims will see nothing of their money if this trustee is allowed to take charge.

The DoJ’s failure to prioritize its own seizures and allowing a trustee unrelated to the case to self-declare, with no evidence, that innocent victims’ money belongs somehow to Miles Guo is a glaring abuse in itself. It’s even more obvious that this is a mechanism by which, if the DoJ fails to secure a conviction, the money will not be returned. There is already a claim in line for the Bankruptcy Court to take their funds, which will no doubt be depleted to cover the trustee’s legal fees and distributed to other creditors first.

Customer Safety

The Himalaya Exchange has stated serious concerns about the security of its customer data. When asked to demonstrate these issues, the exchange, following its strict security protocols that encompass ID verification and AI facial recognition via the Jumio platform, disclosed a troubling incident encountered during a customer’s sign-up process. This incident, marked by a shocking image, emphasized the critical need for stringent security practices to protect user information.

This image, capturing a man brandishing a knife behind a woman attempting to set up an account, serves as a stark reminder of the serious threats faced by Chinese dissidents.

“To its users, the Himalaya Exchange is more than a financial choice; it often serves as their only protection against the CCP’s heavy-handed tactics to suppress opposition. The protection of customer identities emerges as a paramount concern, underscored by this harrowing incident. This event not only exemplifies the risks faced by users but also contextualizes the necessity of safeguarding their identities amidst ongoing legal proceedings,” continued Bradford L. Geyer.

“The persistent attacks against the Himalaya Exchange – from large volumes of false defamatory social media and the propagation of baseless legal complaints – are indicative of a concerted effort to take down an entity that stands as a bastion of financial liberty and privacy. These challenges, while formidable, have only reinforced the exchange’s resolve to protect its customers and uphold its values against seemingly insurmountable odds.

“Given this context, the Department of Justice’s (DoJ) actions, if taken with full awareness of the plight of these victims, could be seen as bordering on predatory behaviour. By proceeding with asset seizures, the DoJ might appear to be exploiting governance mechanisms against individuals championing the very liberties we value. This situation highlights a troubling intersection of legal authority and the protection of fundamental human rights,” concluded Bradford L. Geyer.

Both the DoJ and the Trustee run their respective cases with the open narrative of protecting victims. However, at the critical juncture of repatriating funds to these individuals, both parties have unfoundedly claimed that these victims are not legitimate customers, without presenting a shred of evidence. This stark inconsistency with their initial allegations raises questions about the true motives behind the seizures. It calls into question whether they are acting with integrity in light of these actions.