Bitcoin and Litecoin Ponzi Scheme Operator Jailed After Being Fined $1.1 Million by CFTC for Crypto Fraud

Never use Bitcon for fraud. That the lesson that was learnt by Joseph Kim, 24, an Arizona investor who was jailed and fined in over $1.1 million USD by the U. S. Commodity Futures Trading Commission (CFTC) for a fraudulent Bitcoin and Litecoin scheme that he ran.

The CFTC has informed, via a press release, that the trader defrauded investors and misappropriated over $600,000 USD from his previous employer’s funds.

Kim was a University of Chicago graduate who was arrested after defrauding clients by the U.S. District Judge Andrea Wood after a two and a half hour hearing. He apologized to his victims during the session.

During September to November 2017, when the crimes happened, Kim transferred Bitcoin and Litecoin from the Chicago-based firm in which he worked to his account. The employer discovered it and fired him at the end of November. After that, he went back to Arizona where his parents lived.

However, the man simply did not stop there. He started to solicit funds from individual customers of the company to maintain the looks that he was still working there.

What he made with all this money? He obviously pocketed it. The firm questioned the man about the missing tokens and he falsely stated that they were transferred into another account. To pay the money back to the employers, he started scamming the clients.

At the first scam, he made about $600,000 USD and $545,000 USD in the second one from at least five customers from December to March 2018.

The Sentence

The CFTC has decided that Kim should pay the amount of $1,146,000 USD for the people he robbed and banned him from ever trading in the United States again, as well as sentenced him for 15 months in jail. It looks like the crime definitely does not compensate, huh?

The prosecutors asked for a sentence of at least four years, while the defense asked for only six months, so the final sentence was a compromise in the middle of the two sides.

He was charged with wire fraud related to cryptocurrencies, the first person ever to be charged with this in the state. He defense affirmed that he “only wanted to invest” and that he “did not blow the money on Ferraris”, he just lost it.

James McDonald, director of enforcement at the CFTC, has affirmed that the main goal of the institution is to protect the investors all over the United States.