In what has been a torrid week for South Korean crypto exchanges, the CEO and the executive director of a legitimate-looking trading platform have been sent to jail for three and two years respectively – after a court found them guilty of duping investors with a bogus exchange.
A branch of the Supreme Court in Seoul convicted the men, surnamed Choi and Park (first names withheld for legal reasons), of running a “fake” cryptoasset trading platform and stealing investors’ funds.
The men created a trading platform named Komid, whose website is still online and looks not unlike many above-board South Korean crypto exchange interfaces. However, the site warns of server errors and has not been updated with any fresh news postings since early 2019.
The court heard how Choi and Park allowed customers to make fiat deposits in Korean won (KRW) as well as major cryptoassets, but filled up the rest of the platform with fake information about token listings, fabricated trading volume figures and details of fictitious trades.
Komid also portentously offered traders loyalty points that it said could be redeemed for cash or tokens.
The men had been convicted of fraud at a previous trial, but made an appeal, with the case eventually ending up at the Supreme Court.
The Supreme Court upheld the original guilty verdicts and the Komid chiefs were convicted of fraud, embezzlement and hiding the company’s operating expense-related data from the authorities.
The news comes a day after police raided the offices of high-profile, Seoul-based crypto exchange Coinbit amid price manipulation allegations. Today, a newspaper alleged that the exchange’s de facto CEO threatened to kill and maim employees – ordering them to carry out phony transaction deals and blackmailing them into giving him cash.