Chicago, IL – Joseph Kim of Phoenix, Arizona, has been ordered to pay over $1.1 million for perpetrating a fraudulent scheme involving Bitcoin and Litecoin, according to a Commodity Futures Trading Commission (CFTC) order filed November 9, 2018. Kim was also sentenced to 15 months in prison on related criminal charges brought by the U.S. Attorney for the Northern District of Illinois.
The CFTC found that between September and November 2017, Kim misappropriated approximately $601,000 worth of Litecoin and Bitcoin from his employer, a Chicago-based proprietary trading firm. He falsely claimed security issues at a virtual currency exchange to justify transferring the funds to his personal accounts. After being terminated from the firm upon discovery of the theft, Kim then began soliciting funds from individuals, falsely representing he had voluntarily left to start his own company.
From December 2017 to March 2018, Kim secured roughly $545,000 from at least five customers, promising a low-risk arbitrage strategy. However, he instead engaged in high-risk trading, ultimately losing all of the investors’ money. Kim concealed these losses by providing fabricated account statements showing profitable trades.
The CFTC order requires Kim to pay $1,146,000 in restitution to his former employer and the defrauded customers. Additionally, he is permanently banned from trading and soliciting in virtual currency markets and is enjoined from further violations of the Commodity Exchange Act and CFTC Regulations.
“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,” stated James McDonald, CFTC Director of Enforcement. “The criminal indictment and sentence reaffirms the CFTC’s commitment to working in parallel with our partners at the Department of Justice to root out misconduct in these markets.” The Federal Bureau of Investigation also assisted in the investigation.
Kim previously pleaded guilty to one count of wire fraud in connection with the misappropriation and fraudulent solicitation of funds.
Source: CFTC.gov
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