Recently, there was news of many new entrants hurrying into launching crypto due to uncertainty in regulations in South Korea. However, two leaders from the Korean cryptocurrency exchange Komid were arrested for their roles in fraudulent trading volume reports on their platform.
According to Blockinpress, the leaders were sentenced to serve jail time for the crime. The Chief Executive Officer [CEO] of the company recognized as Choi received a 3-year sentence, while Park, another leader was sentenced to 2-year sentence for fraud, embezzlement, and misconduct.
As per the reports, the prosecutors outlined the charges as a scheme wherein the two defendants fabricated 5 million transactions on their platform to cheat the investors into thinking that the volume projected was legitimate which earned them $45 million. Some are suggesting that the two leaders used “bot” to automatically create large orders which pulled in new users.
The judge was quoted by the publication saying:
“Choi has committed fraud for a countless number of victims for a long period of time…. Furthermore, he holds the financial authorities responsible for failing to keep track of the industry better.”
The defendant, Park told the story of their wrongdoings and said:
“Choi entered false orders, then we repeated the process and fooled investors into thinking the transactions were authentic, organic trades.”
South Korea is going through a regulatory uncertainty despite the high demand and a profitable business model, many new cryptocurrency exchanges are prepping to launch in the country. According to Bitcoin news, ten crypto platforms are expected to be functioning for business in the first half fo 2019. Komid was one of the early exchanges to launch in the month of January itself.
According to reports by Bitcoin news, the primary reason of companies indulging in crypto was due to high virtual currency commission income. The source of the publication said:
“In the case of Upbit and Bithumb, the largest exchanges in Korea, daily average commission income is estimated at 3.6 billion won and 2.6 billion won, respectively.”
Recently, even UPbit was accused of similar charges of fraud and even some of its executives were charged with creating fake membership accounts and manipulating the accounts.
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