The U.S. Commodity Futures Trading Commission (CFTC) has jailed a bitcoin trader and fined him over $1 million for running a fraudulent bitcoin and litecoin scheme.
According to a press release issued Friday by the CFTC, the trader, Arizona resident Joseph Kim, admitted to defrauding investors of hundreds of thousands of dollars after misappropriating more than $600,000 of his previous employer's funds.
Between September and November 2017, Kim transferred bitcoin and litecoin from his employer, a Chicago-based trading firm, to his own personal accounts, causing the firm losses of $601,000, according to the release.
When the firm questioned Kim about missing tokens, he falsely stated that security issues with the crypto exchange required transfers into other accounts. Upon discovering Kim's theft in November of that year, the firm immediately fired him.
But Kim didn't stop there. He then started soliciting funds from individual customers, apparently to continue trading in crypto with the hope of making profits to repay his ex-employer. As a result, he fraudulently obtained approximately $545,000 from at least five customers between December and March 2018.
Kim reportedly lied to customers that he had voluntarily left his employer to start his own trading company. He also falsley claimed he would invest funds in a low-risk arbitrage strategy, when in fact, he made high-risk trades with the cryptocurrency and lost all $545,000 of his customers' funds.
In addition to a fine of $1,146,000, the CFTC has also permanently banned Kim from trading, including in cryptocurrencies, and sentenced him to 15 months in jail, according to the release.
James McDonald, director of enforcement at the CFTC, said:
"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.
Bitcoin and gavel image via Shutterstock
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
Analysis: What 2019 Could Bring for Bitcoin
Trading in altcoins was a big part of what made Bitcoin price spike towards the end of 2017. A section of the crypto space argues that while altcoins helped Bitcoin’s market cap swell, they also bro
Bitcoin Cash Going Down as Stellar Warms up
Bitcoin Cash’s market cap has been cut in half since the Nov. 15 hardfork which birthed the Bitcoin ABC and Bitcoin SV chains. Now at a mere $3.5 bln and a unit price of ~$201 as at the time of writ
300k User Data from Chinese Auto Finance Platform Sold For One Bitcoin on Dark Web
It is revealed that 300,000 pieces of user data from a Chinese auto finance platform Jiurong were compromised and priced at one bitcoin on the dark web.
According to the leaked data posted, persona
Heyday of Bitcoin Mining Rigs Business at China’s Huaqiangbei is Over Amid Crypto Market Carnage
Bitcoin price slumped to a 13-month low of about $4,300 on Wednesday, making mining the world’s leading digital currency an unprofitable business. A lot of mall miners, mining rigs dealers and minin
Dialogue with Bitcoin Evangelist in Latin America: RSK Labs CEO Diego on Crypto Industry
Diego Gutierrez is the CEO at Koibanx and president of Bitcoin Argentina NGO. In addition, Diego also serves as the CEO of Rootstock/RSK Labs, a smart contract platform built on top of bitcoin.
China’s Bitcoin Billionaire Zhao Dong : Bitcoin Price to Hit $50,000 in Three Years—Now Is the Time to Buy the Dip
Despite Bitcoin’s latest crash and a real chance that its price will go much lower, Zhao Dong, prominent Chinese OTC trader and founder of Dfund, remains bullish on the the world’s biggest cryptoc
Bitcoin Miners Sold by Kilo in China Amid Cryptocurrency Crash
The leading cryptocurrency bitcoin once fell below $4,300 on the afternoon of November 20 – down more than 17% on a 24-hour basis and hitting a 13-month low since October 2017. Great losses are seen
Xiao Lei: 3 Main Reasons of the “Unreasonable” Bitcoin Price Crash
Cryptocurrency markets experienced a havoc in the past few days. Bitcoin, the uncrowned king in the crypto world, has fell as much as 30% over the past two weeks, while other major tokens are all suff