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“Everyday for the thief, one day for the owner,” they say. Well, that proved true in the case of this South Korean crypto exchange, CoinUp, which the police found to be a fraudulent scheme.
According to local South Korean news reports, the crypto exchange was involved in an elaborate scam worth over $380 million. The firm allegedly deceived its investors into committing to a worthless digital coin, in the hope of getting a bigger return.
CoinUp’s Chief Executive Officer (CEO) Kang Seok-Jung, together with other top executives in the firm, intentionally misrepresented the goal of the company and presented the investment scheme in such a way that that early investors are being paid off by the investments of later investors, essentially rendering it a crypto Ponzi scheme. Robbing Peter to pay Paul; the perfect recipe for failure.
With full knowledge that the Ponzi scheme is doomed to fail, the CEO Seok-Jung and other executive members of the firm went on an deliberate spree to make money off unsuspecting “greedy” investors.
The supposed cryptocurrency exchange took the scheme up a notch and doctored a photo of the CEO with the President of South Korea. Among other things, this misrepresentation gives a certain level of confidence to investors, reassuring them that the firm is recognized or backed by the president.
With such an assurance and the alluring benefit of ‘200% increase on your investment between 4 and 10 weeks’ as promised by the firm, it is no wonder that a crowd of people was drawn to the Ponzi scheme.
Fortunately, law enforcement agencies in South Korea got the tip early enough and had their eyes set on the firm. As you guessed, the effort paid off and they were able to catch the CEO and his accomplices in their own game.
The court order reads:
“They [the accused] created a plausible appearance, including a magazine with a current president’s composite picture, and portrayed the fraudsters in a deceptive, organized, and precise manner… The organization of the crimes, the number of victims, and the amount of damage show in the light of the truth that the sin is serious.”
Finding the executives of the firm guilty, the Judge sentenced the 53-year-old CEO to 16 years imprisonment, while dishing out lesser punishments to his accomplices.
Per the sentence, the Chief Financial Officers (CFOs) will be away for 11 years each, and a 7 years sentence was handed to the governor and vice President of the fraudulent cryptocurrency exchange.