Prosecutors to NewBit: Get Rekt
The president of NewBit exchange in South Korea is defending himself against the call for a 5 year prison sentence following a lengthy prosecution. Other officers from the exchange may receive 3 year sentences each. For deceiving investors with false information via meetups and personal correspondences, and manipulating trade volumes to appear much higher than they were in reality, charges of fraud are being pressed hard against the group.
It is estimated that up to 4,000 victims suffered over 54 billion KRW ($46mil) in damages since December 2018. The case was filed against the exchange on the whistle-blowing efforts of 65 individuals to the Korean government.
Younggeun Yoo, the Deputy Judge of the Seoul Central District Court presides over the case. Yesterday on the 21st, however, the prosecution capped their arguments by stating that NewBit sold tokens that didn’t exist, were not actually involved in blockchain technology, and that NewBit was a centralized entity.
The facts stood in the face of what NewBit representatives had been caught telling investors in order to gain investment. For example, Park told investors that NewBit would reimburse them for 100% of their damages should the price of the token fall below a certain price.
If a claim seems too good to be true, it likely is.
NewBit was founded in December 2018 with a Mr. Park (name withheld per Korean defamation laws) as an exchange that issued its own New Bee Token. Contrary to what is stated in the white paper, over 2 million New Bee Tokens were paid to NewBit representatives’ accounts before the exchange was opened.
Park and accomplices were arrested last August by Seoul Metropolitan Police on charges of aggravated economic crimes.
Membership numbers were inflated for investors. They announced memberships of about 40,000, when in reality they had fewer than 4,000. NewBit also announced that they would distribute exchange fee revenues to token holders daily via ETH. Those dividends would be substantial with 40,000+ members, which added further fraudulent incentives to the existing injury.
Through payback, buyback, and sale events, over 2 million New Bee Tokens were sold.
This debate in the court may represent an important precedent that other cases will use to help them rule on other cases that may be ongoing or come up in the future. The criterion used to rule on the case will certainly serve as important criterion for other cases in the context of recent complaints of victims in small and medium-sized related dividend schemes involving cryptocurrencies.
