Scam News

CFTC fines a crypto trader $1.1M for running a fraudulent crypto scheme

Joseph Kim, who resides in Arizona, USA, has been fined $1.1 million by the United States Commodity Futures Trading Commission (CFTC) for running a fraudulent crypto scheme between December 2017 and March this year.

According to information posted on CFTC’s website, Joseph’s misfortunes started when he stole over $600K from his previous employer, a crypto trading platform, and which belonged to the exchange’s customers.

Kim stole the funds late last year by transferring Bitcoin and Litecoin from the company’s wallet to his personal wallet.

When asked about the missing crypto coins, Kim denied ever transferring them to his own wallet but blamed it on the exchange’s security problems stating that the coins had to be moved to other accounts. But before long, the exchange unearthed Kim’ activities and fired him.

The urge to continue trading and recover his previous employer’s funds saw Joseph masquerading as a trusted crypto trader with his own crypto firm and started asking for Bitcoin and Litecoin from some of his ex-employer’s clients. When the clients asked why he left, Joseph said he let in good faith to build his own crypto exchange platform.

This convinced some clients who trusted Kim with crypto coins worth approximately $545,000. But, instead of investing the funds in ‘a low-risk virtual currency arbitrage strategy’ as he claimed, Kim ‘made high-risk, directional bets’ that saw him lose all his clients’ funds.

To conceal his losses, he falsified account statements he sent to his customers to show the opposite.

James McDonald, Director of Enforcement, CFTC, noted that:

“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.”

Apart from the $1.1M fine for running a fraudulent crypto scheme, Kim will be serving 15 months in jail for misappropriation of funds from his ex-employer.

Do you think the security departments in the U.S. are joining hands to provide a fair crypto playground even without comprehensive crypto regulations in place?

Let us know in the comments section below.


Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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