Crypto Exchange Bitsonic CEO Sentenced to 7 Years in Prison for $7.5M Fraud
The CEO and CTO of Bitsonic have been sentenced to prison for trading volumes of self-issued coins and stealing customer deposits.
A Seoul District Court sentenced Korean cryptocurrency exchange company Bitsonic’s CEO Jinwook Shin to seven years in prison. He was put on trial for various charges related to inflating market prices, trading volumes of self-issued coins, and stealing customer deposits.
The court accused them of stealing $7.5 million (10 billion South Korean won) worth of customer deposits.
Additionally, the court sentenced Bitsonic’s chief technology officer Bae to one year in prison, as the South Korean media outlet Yonhap news agency reported.
The charges against Shin include fraud, forgery of prior self-records, falsification of prior self-records, and interference with work by a computer under the Punishment Act for Specific Economic Crimes. Bae was indicted on charges of obstruction of business due to a computer disorder.
Moreover, the court found that Shin used his position as a coin exchange operator and manager to manipulate the essential information processing function of the virtual asset exchange, creating the appearance of increasing transaction volume through everyday transactions. This manipulation resulted in the swindling of more than 10 billion won from numerous victims.
The court said, “Using his position as a coin exchange operator and manager, he neutralized the essential information processing function of the virtual asset exchange and created the appearance that the transaction volume in this case was increasing through normal transactions.”
How the Fraud Took Place?
Shin allegedly increased trading volume through a method known as ‘buyback,’ using Bitsonic funds to repurchase quantities of BSC (Bitsonic Coin), a coin issued by Bitsonic, to raise its price. Fake Korean Won points were also entered into the Bitsonic system to feign cash deposits.
Additionally, Shin recruited 101 coin investors and stole cash and virtual assets worth about 10 billion won that they had deposited without returning them. Bae was accused of creating and running a program that allowed Shin to purchase coins held by him first in the transaction system, facilitating the fraudulent activities.
The court highlighted the significant damage to trust in virtual asset exchanges, emphasizing the necessity of trust between operators and users. Despite the damage, the defendants showed no remorse, and a substantial amount of the damage remains unrecovered.
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