The US Commodity Futures Trading Commission (CFTC) issued an Order against a cryptocurrency trader, requiring him to pay upwards of $1.1 million and to serve 15 months in prison over a fraudulent Bitcoin and Litecoin Scheme.  

Cryptocurrency Trades Gone Wrong

The CFTC Order, issued on November 9th, specifies that cryptocurrency trader Joseph Kim had misappropriated some $600,000 worth of Bitcoin and Litecoin from his former employer – a trading company based in Chicago. The ex-employee was able to do so through a range of transfers between his company’s accounts and his personal ones, misleading clients that these transfers were necessary because of “security issues.”

The Commission also finds that Kim’s former employer discovered his wrongdoing and terminated him after suffering a loss of $601,000.

However, after his termination, Kim began soliciting funds from individuals, purportedly hoping that he would be able to use the trading profits to repay the company’s losses. It is found that between or about December 2017 and March 2018, the trader managed to obtain and, eventually lose a total of $545,000 of his customers’ funds. The trader concealed the losses by sending untrue account statements which reflected profitable trading.

Kim pleaded guilty and he has been ordered to repay the funds he lost as a result of his actions, while also serving 15 months in prison.

CFTC’s Mission to Halt Cryptocurrency Fraud

Commenting on the above Order, James McDonald, Director of Enforcement at the CFTC noted:

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.  In addition, 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.  My thanks to U.S. Attorney Lausch and his staff, as well as the Federal Bureau of Investigation, for their assistance in this case.

Indeed, the commission has been fairly proactive in its fight against crypto-related fraud. Earlier in September, Live Bitcoin News reported that the CFTC has charged two individuals with multiple counts of criminal offenses for attempting to steal bitcoins from their customers. The Commission also cracked down on another Bitcoin Ponzi scheme.

It’s also worth noting that despite its active position on the matter, the Commission’s Chairman J. Christopher Giancarlo has been known to advocate for a “do no harm” approach to regulating cryptocurrencies.

What do you think of the CFTC’s Order against Joseph Kim? Don’t hesitate to let us know in the comments below!

Images courtesy of ShutterStock

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