Coinup CEO Gets 16 Years for Fraud
This afternoon in Seoul, a Mr. Kang (first name withheld), the CEO of Korean crypto exchange Coinup was sentenced to 16 years in prison for fraud under the Specific Economic Crimes Aggravated Punishment Act. Another C-level executive of the company, Mr. Shin, was sentenced to 11 years. Mr. Jang and Ms. You were sentenced to 7 years each, the latter being the vice-president of the company.
Others were sentenced to 6 to 9 years in prison for their crimes.
Their fraud consisted of attracting a rough total of 450bil KRW ($386,100,675) from August 2018 to February 2019 by deceiving thousands of people through a cryptocurrency promotion.
They claimed that the value of the cryptocurrencies they indicated would increase significantly, and that if they invested in packaged products, investors would see returns of up to 200% after 4 to 10 weeks. This might also be known as a ‘Pump and Dump’ scheme.
Investigations revealed that those claims were made mostly to mislead investors and pilfer money from unsuspecting individuals. They used a multi-level organization to run a “blocking” approach that ensured the profits of those who invested earlier with money from those who later invested. This operation resulted in an overall negative return; it was a Ponzi scheme.
The court found most of the implicated individuals guilty, however, some senior executives related to the case, who were in various lower or non-decision-making roles, were regarded as de facto accomplices and received lower sentences.
The judiciary said “[They created a plausible appearance, including a magazine with a current president’s composite picture, and portrayed the fraudsters in a deceptive, organized, and precise manner… The organization of the crimes, the number of victims, and the amount of damage show in the light of the truth that the sin is serious.]”
Coinup has been on Korean prosecutors’ radar for some time, at least since early this year when their apparent scam became public. It was reported that investors should beware of the claims being made by the Coinup team as being wholly untruthful.
