A Seoul court jailed South Korean crypto exchange Bitsonic executives for manipulating crypto prices – and profiting to the tune of $7.5 million.
Newsis reported that the Seoul Eastern District Court sentenced the CEO of the Bitsonic trading platform to seven years in prison.
South Korean Crypto Exchange Bitsonic Case: Judge Gives ‘Lenient’ 7-year Sentence
The same court found the Bitsonic chief technology officer, surnamed Bae (43), guilty of lesser charges. Bae was sentenced to one year in prison.
The CEO, Shin Jin-wook (40), was found guilty of fraud and the falsification of official documents.
Bitsonic CEO Shin Jin-wook speaking during an interview in 2019. (Source: Hashnet/YouTube)
South Korean law stipulates that defendants can appeal guilty verdicts and sentences at the High Court and the Supreme Court.
Shin and Bae have not yet indicated if they will seek to overturn the Seoul District Court’s verdict and sentencing.
However, Seoul District Court Lee Jong-chae claimed that he had been lenient with the sentencing as Shin had “reached an agreement with two of the victims who suffered the largest amount of damages.”
Judge Lee added that neither Shin nor Bae had a history of committing similar types of crime – also a factor in sentencing. Lee explained:
“Under the pretense that the exchange was operating normally, [Shin] collected over [$7.5 million] from several victims over a long period of time. This was a fraudulent operation.”
How Did Bitsonic Chiefs Dupe Victims?
Bitsonic began tricking victims into making risky crypto investments in February 2019, prosecutors explained.
Shin and Bae created sophisticated computer programs that fooled investors into believing they were running a bona fide crypto exchange.
However, they also created software that let them manipulate the prices of certain self-issued altcoins.
This software drove up prices by automatically buying and selling Bitsonic coins on the exchange.
But all the software made these purchases using wallets that actually belonged to Shin.
The court also heard that Shin created a “paper company” that produced “inflated” Bitsonic sales and operating profit data.
The court heard that 101 crypto investors believed the exchange was above board, and sent the firm fiat and crypto holdings.
Shin “pocketed” the lion’s share of these crypto and fiat deposits, prosecutors told the court.
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— Bloomberg Economics (@economics) February 4, 2024
Under a law introduced in September 2021, every South Korean crypto exchange must obtain an operating permit.
If they wish to offer fiat on/off ramp services, trading platforms must also partner with domestic banks that offer social security number-verified trading.
In 2023, a judge jailed the head of the bogus crypto exchange V Global for 25 years, after convicting him of defrauding victims out of $2.3 billion.