24-year-old Joseph Kim of Phoenix, Arizona, has been sentenced to 15 months in prison for cryptocurrency-related fraud, according to the Illinois US Attorney’s Office.
With friends like these
Specifically, he has been convicted of stealing at least $600,000 in Bitcoin and Litecoin from a former employer and $545,000 from personal friends, making a total of $1.15 million. He used the proceeds for his personal enrichment.
Kim worked as an assistant trader for Consolidated Trading, a Chicago-based firm which offers trading in currencies and commodities. The company recently opened a cryptocurrency trading desk. Working on this desk, Kim covered his own trading losses by stealing Bitcoin and Litecoin belonging to the company and lied about it when asked.
He was discovered and fired, at which point he began soliciting money from friends and friends of friends telling them that he voluntarily left his job. According to the indictment, some of these people gave him their retirement savings. He continued the same pattern of behaviour, incurring personal losses, but gave these friends documentation falsely indicating that his trades were profitable.
The crimes took place over a two-month period.
Kim pleaded guilty to one count of wire fraud at his trial. Four investors testified against him, and the Commodity Futures Trading Commission also filed charges.
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Sunil Harjani and Sheri Mecklenburg, Assistant U.S. Attorneys, said in the sentencing document: “It is important that the public know that despite the complexity of cryptocurrency trading, the criminal justice system will hold traders and investment professionals accountable for cheating and stealing.”
In June 2018, 50-year old LA resident named Theresa Tetley received 30 months for operating a Bitcoin business for three years, which included processing at least one drug deal.
In September, a Texas resident was sentenced to 21 months for his involvement in a Ponzi scheme based on four fraudulent Bitcoin mining companies. This fraud took $9 million from investors. In addition to jail time, Homero Joshua Garza was ordered to pay $9.1 million in restitution.
None of these compare to 24-year-old Ross William Ulbricht who was sentenced to life without the possibility of parole in 2015 for operating a Bitcoin-based marketplace called the Silk Road.
Ulbricht also hails from Texas. In January, the Texas State Securities Board served a cease and desist order to the infamous BitConnect, which had been operating there from the UK, and to AriseBank, which described itself as “the world’s first decentralized cryptocurrency bank”, but was not registered as a bank. Then in November, it halted the Texas-based activities of a very dodgy company which claimed to operate from Quebec.
In April, the TSSB completed a four-week investigation of illegal cryptocurrency-based schemes, finding 32 in operation in the state, of which at least six had some Ponzi-like characteristics.