In a shocking turn of events, the CEO and technology chief of Bitsonic, one of South Korea’s prominent cryptocurrency exchanges, have been handed prison sentences for orchestrating a $7.5 million theft from customer deposits. The Seoul District Court delivered the verdict, sentencing CEO Jinwook Shin to seven years and the vice president of technology, known only as Mr. A, to one year in jail.
The court disclosed that the fraudulent activities took place between January 2019 and May 2021, during which Shin manipulated transaction volumes by utilizing Bitsonic’s funds to purchase the exchange’s own token, thereby artificially inflating its value. Simultaneously, Mr. A developed a program to buy the cryptocurrency held by Shin, contributing to the deceptive inflation of prices on the exchange.
The court proceedings unveiled a web of deception that spanned over two years, from January 2019 to May 2021. Jinwook Shin, entrusted with the helm of Bitsonic, abused his authority by manipulating transaction volumes and artificially inflating the price of the exchange’s token using company funds. His accomplice, Mr. A, devised cunning schemes to further distort the market, compounding the financial losses suffered by unsuspecting investors.
With a disregard for ethical conduct, Shin resorted to forging records and disseminating false information, including a fictitious partnership announcement with an international exchange. The illusion of prosperity crumbled when investors attempted to retrieve their assets, only to find their accounts drained and their trust shattered. Bitsonic, once heralded as a beacon of innovation in the crypto landscape, abruptly ceased operations in August 2021, citing unspecified “internal and external issues.”
The court’s verdict underscored the profound ramifications of such fraudulent activities, lamenting the erosion of trust in crypto exchanges inflicted by Shin and Mr. A. Despite the severity of their crimes, a “significant amount” of customer funds remains unrecovered, casting a shadow of uncertainty over the fate of those affected.
In a parallel development underscoring systemic vulnerabilities in the digital asset ecosystem, Seoul’s Prosecutors Office apprehended the CEO and two executives of Haru Invest, a crypto yield platform embroiled in its own controversy. Accused of misappropriating a staggering $830 million from over 16,000 users, the trio stands accused of perpetrating a far-reaching scheme of deception and exploitation. By reinvesting users’ funds without consent, they capitalized on the opacity of cryptocurrency transactions, siphoning vast sums with impunity.
Shin further deceived users by injecting fake South Korean Won into the exchange’s system, creating an illusion of cash deposits. The court emphasized that trust in crypto exchanges had been significantly damaged by the actions of Shin and Mr. A, who showed no remorse and actively avoided responsibility.
One of the tactics employed by Shin was the posting of a false notice on Bitsonic, claiming a partnership with another international exchange. This fraudulent scheme unraveled when investors discovered they couldn’t withdraw their funds, resulting in Shin siphoning $7.5 million in customer assets.
The court expressed concern over the lingering impact on Bitsonic users, as a substantial amount of funds has yet to be recovered. Despite efforts, the exchange officially closed its operations in August 2021, citing internal and external issues.
This incident highlights the vulnerability of cryptocurrency exchanges to fraudulent activities and emphasizes the need for stringent regulatory measures to protect investors. South Korean authorities have been increasingly active in addressing such issues, as evidenced by the recent arrest of the CEO and two other executives of Haru Invest, a crypto yield platform that suspended withdrawals in June last year.
Seoul’s Prosecutors Office revealed that the trio allegedly misappropriated $830 million worth of crypto from 16,000 users, reinvesting most of the funds between March 2020 and June 2023. The arrest underscores the importance of thorough scrutiny in the crypto industry to prevent fraudulent practices and safeguard investor interests.
As the global crypto community grapples with the fallout of such scandals, regulatory bodies worldwide are urged to revisit their stance on cryptocurrency exchanges. The need for increased transparency, accountability, and security measures within the crypto space has become more evident than ever.
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