South Korean cryptocurrency entrepreneurs sent to prison over volume scam

Chris Lee
Flag of South Korea

Those in charge of two cryptocurrency exchanges in South Korea have been sent to prison after they were found to have inflated the trading volume of the exchanges at which they worked.

According to news sites in the region, two leaders of an exchange called Komid have been convicted on charges including fraud, misconduct and embezzlement.

It is believed that the pair engaged in a crypto scam designed to boost the overall value of their exchange. They supposedly created five million false transactions, which in turn pushed up the trading volume.

According to reports, they may also have used the assistance of technologies designed to help automate processes like these – such as bots.

In total, the pair are believed to have accrued $45 million through the process.

In terms of sentencing, CEO Choi Hyunsuk was sent to prison for three years. An unnamed person, who is also believed to have been a senior leader at the firm, was sent to prison for two years.

According to the judge in the case, the pair had caused significant problems for those who lost cash – as well as those who stood to lose out from a longer-term decline in trust in the crypto markets.

“The crime has damaged customers’ confidence in the virtual currency exchange and has had a negative effect on the domestic virtual currency trading market”, the judge is reported to have said.

The judge was also quoted by local news outlets as claiming that Choi in particular was attempting to shift the blame towards others, rather than let it remain on himself.

“Choi has committed fraud for a countless number of victims for a long period of time…. Futhermore [sic], he holds the financial authorities responsible for failing to keep track of the industry better”, the judge apparently said.

However, it was also acknowledged at the trial that the pair had attempted to make amends. News sources indicate that some parts of the cash taken had now been sent back to investors.

South Korea has seen its fair share of crypto scams in recent years.

Late last year, for example, stories appeared in Asian press outlets claiming that an alleged fraudster in the country was selling off access to a long-sunken ship called the Dmitrii Donskoi in return for crypto investments.

It’s believed that well over 2,500 investors ended up investing in the scheme in order to secure what they thought would be access to the gold.

In the end, the alleged perpetrator’s assets – which in total amounted to around $2.1million US dollars – were frozen by the authorities in the country.

In another alleged scam, almost $3 million US dollars were believed to have been taken fraudulently as part of an initial coin offering from an organization called Pure Bit.

In that case, it was believed that Pure Bit, a supposed crypto exchange, was apparently launching an exchange token. However, in the moments after the closure of the ICO the funds were then diverted to one particular location.

Chris Lee

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