Two South Korean Executives of Komid Exchange Were Sentenced to Jail for Faking Trade Volumes
In a major blow for the global crypto sector, two executives working for an established cryptocurrency exchange called ‘Komid’ have reportedly been sentenced to jail for “purposely inflating trade volumes” through the use of digital bots and fake financial accounts.
A Closer Look at the Matter
As mentioned earlier, the two executives working for South Korean crypto exchange ‘Komid’ have already been sentenced to jail for participating in a couple of fraudulent activities.
One of accused persons is Choi Hyunsuk, the CEO of Komid while the other individual’s identity has not yet been revealed by the police. Hyunsuk has received a “three-year prison sentence while the other executive will be facing a term of at least two-years”.
In this regard, a local news outlet was quoted as saying:
“This is the first time a representative of a virtual currency exchange has been sentenced to prison for allegedly inflating trading volumes.”
For those of our readers who may not be aware, Komid started operations around a year back after completing all of its initial beta test runs. As per a statement released by local court authorities,
“Choi created more than five fake accounts last year through which he purposely inflated trading volumes using digital currencies as well as the Korean won” (on his exchange).
Yesterday, News Asia also ran a similar story and stated the following in their report:
“The charges from prosecutors outlined a scheme wherein the two defendants fabricated 5 million transactions on their platform to deceive investors into thinking that the volume was natural. This led to the two earning about $45mil. There is also a suspicion that they utilized a ‘bot’ to automatically create large orders, which attracted new users.”
How Will This Case Affect Investor Sentiment Worldwide?
In relation to the matter, the judge who presided over Choi’s case was quoted as saying that Hyunsuk had “defrauded countess victims” and there was a clear need for doling out punishment as soon as possible.
However, the judge did take into account the fact that the guilty parties had returned some of the swindled money and thus their intentions were not completely malignant.
He then went on to state:
“The crime has damaged customers’ confidence in the virtual currency exchange and has had a negative effect on the domestic virtual currency trading market.”
Over the course of the past couple of years, quite a few cryptocurrency exchanges have been mired in scandals related to the use of trading bots (for falsify orders). For example, late last year, some of the folks over at UpBit were indicted for fraud.
It was being alleged that a few executives working for the firm had “faked orders worth approximately $226 billion and sold 11,500 BTC to around 26,000 investors”.
Similarly, people working for Coinnest and HTS Coin too have recently been involved in matters related to monetary fraud and embezzlement.