The South Korea-based CEO and executive director of a bogus crypto exchange have been jailed by a branch of the Supreme Court in Seoul for their roles in fraudulent trading activity on their platform.
As reported by local media outlet Blockinpress, both executives from a trading platform called Komid had their appeals shot down by the court. One will serve three years, the other will serve two. Choi and Park, whose first names aren’t being disclosed by law enforcement, are accused of fabricating trading volume data for fake trades conducted on their platform. Doing so boosts reputation among the crypto community in South Korea, but it appears they were caught in the act of manipulation.
Their scam worked by letting customers deposit Korean won and other major cryptocurrencies in exchange for cryptocurrency, but it also filled the platform up with fake information about fraudulent token listings.
The trading activity reported by Komid raised suspicion from the authorities — it had reported $5 million in transactions. These volumes give the external appearance of a legitimate-looking trading company, but the court believes that the would-be businessmen were using a software bot to generate large (yet meaningless) trading activity.
Ahn Seong-joon, the judge overseeing the case, made the following comments:
“Mr. Choi and others have repeatedly committed fraud for a considerable period of time targeting a large number of unspecified victims. Mr. Choi and others used the point balance that was falsely entered for the actual cryptocurrency transaction.”
South Korea’s third-largest cryptocurrency exchange, Coinbit, was rececently seized by police following allegations of fraud. According to a report by South Korean media outlet Seoul Shinmun, 99% of transaction volume on the exchange was also faked through wash trading.