American man jailed over cryptocurrency fraud

Chris Lee

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An American man has been sent to prison after he masterminded a cryptocurrency fraud which saw hundreds of thousands of dollars lost.

Joseph Kim, from Phoenix in Arizona, was sent to prison by a court in the Northern District of Illinois over the crimes. He stood trial on charges of wire fraud, and has been sentenced to 15 months.

On the same day, he was fined by the major American regulator the Commodity Futures Trading Commission (CFTC).

He was told by them that he would need to pay out around $1.1 million US dollars – a figure equivalent to over £800,000 British pounds.

Kim’s illegal activities began back in 2017, when he moved tokens which were actually his employer’s – a firm based in the major US city of Chicago – into his own personal collection.

The crimes are believed to have begun in September, although they were not discovered until November. Kim was asked about the movement of the money following the incident, and he claimed that it happened for security reasons, a claim that turned out to be false.

However, even when he was dismissed from his post at the company, Kim continued to commit crimes. He managed to secure over half a million dollars from a group of investors believed to be at least five in number.

According to media reports, he then lost all of this cash. This was despite him telling his victims that the plan he intended to follow was what the CFTC described as a “low-risk virtual currency arbitrage strategy”.

In addition to his sentence, Kim has also been given a registration ban for cryptocurrency trading, as well as for solicitation of funds.

The cryptocurrencies in question were the big name coin Bitcoin and also a less well-known altcoin, Litecoin.

The CFTC pointed out that Kim admitted to the charges.

“The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Joseph Kim (Kim), of Phoenix, Arizona, requiring Kim to pay more than $1.1 million for a fraudulent Bitcoin and Litecoin scheme”, it said.

“In the order, Kim admits to orchestrating a fraudulent Bitcoin and Litecoin scheme that led to more than $1 million in losses, of which Kim misappropriated more than $600,000.”

The investigation stretched across a number of anti-crime agencies.

“The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Northern District of Illinois, the Federal Bureau of Investigation, and the Securities and Futures Commission of Hong Kong”, the statement continued.

The CFTC’s Director of Enforcement added that the case was another example of the CFTC’s commitment to action.

“Today’s Order stands as yet another in the string of cases showing the CFTC’s commitment to actively police the virtual currency markets and protect the public interest”, said James McDonald.

“In addition, the criminal indictment and sentence reaffirms the CFTC’s commitment to working in parallel with our partners at the Department of Justice to root out misconduct in these markets. My thanks to U.S. Attorney Lausch and his staff, as well as the Federal Bureau of Investigation, for their assistance in this case”, he added.


Chris Lee

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