Authorities charged an Arizona man with fraud against his former employer, as well as group of private investors. He used their crypto assets to gamble on investments and lost hundreds of thousands in the process.
Joseph Kim, 24, is a graduate of the University of Chicago and former employee of Consolidated Trading LLC in the same city. The prosecution states:
“From September through November 2017, Kim transferred more than $2 million of the trading firm’s Bitcoin and Litecoin to personal accounts to cover his own trading losses, which had been incurred while trading cryptocurrency futures on foreign exchanges”
Consolidated discovered that something was amiss and questioned the Arizona man late last year
Kim tried to cover up his crimes by saying security issues forced him to move the money to safer accounts. However, the firm discovered the truth and promptly fired him.
Kim, a native of Arizona, also collected money privately from five different investors totalling $545,000. He used these funds to gamble on a high-risk trade and lost a substantial amount. Additionally, he defrauded these investors by telling them that he had willingly resigned from Consolidated in order to create his own investment company. In fact, at first he attempted to cover up the losses by refunding the traders some of their money. All these actions contributed to the charges against him.
The U.S. Commodity Futures Trading Commission (CFTC) has charged Kim with fraud
They ordered him to pay $1.1 million in restitution to Consolidated and the five investors. Also, authorities placed him under a permanent trading and solicitation ban.
Additionally, the U.S. Attorney for the Northern District of Illinois charged Kim and sentenced him to prison for 15 months. Kim pleaded guilty, with a bond set at $100,000. He has also surrendered his passport and may currently only travel between Illinois and Arizona. Finally, he is not allowed to communicate with his former employer.
Kim seemed contrite about his actions
He referred to himself as a “DEGEN,” slang short for “degenerate gambler.” When Consolidated discovered the fraud, Kim emailed his bosses,”It was not my intention to steal for myself. Until the end I was perversely trying to fix what I had already done”. Likewise, in court, he stated, “I can’t believe I did not stop myself when I had the money to give back, and I will live with that for the rest of my life”.
The Illinois court stated that this is their first prosecution regarding crypto trading.
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