Crime

Cryptocurrency trader from Chicago is facing fraud charges

Author – Anujit

In what can be considered as the first of such cases in the USA, a cryptocurrency trader based out of Chicago, Illinois, USA, is facing charges of fraudulent misappropriation of US $ 2 million in cryptocurrencies. Joseph Kim, the accused, worked for Consolidated Trading, LLC, a trading company based out of Chicago that recently opened a cryptocurrency trading group.

Joseph Kim is alleged to have transferred Bitcoins and Litecoins worth US $ 2 million from the company’s accounts, to his personal cryptocurrency trading account, over a two months period from September to November 2017. He is a cryptocurrency trader himself. He was asked to stop his personal cryptocurrency trading activities by the company, because it would cause a conflict of interest. While he had agreed to do so, he actually continued to trade in cryptocurrencies using his personal account. As it happens with any stocks or derivatives trading, some bad trading decisions can cause one to lose money even in the cryptocurrency space, due to highly speculative nature of cryptocurrency trading. Kim lost money, and felt that the easy way to cover his losses was to misappropriate his company’s funds. Over the two months period, allege the prosecutors, Kim transferred 284 Bitcoins worth US $ 2.8 million from Consolidated’s account to his personal wallet.

The management in Consolidated confronted him when they noticed cryptocurrencies transferred out of their account, and the explanations provided by Kim seemed to sound increasingly suspicious as time wore on, and they took the legal route. The transaction records show that Kim later transferred back some of the coins into the account of Consolidated, losing some money in the process while he was trading from personal account. The company has also been able to recover US $ 1.4 million from Kim’s personal account, but not the remaining US $ 603,000 worth of coins. Kim has admitted to all the wrongdoings, and apologized. He has admitted that he had become a degenerated gambler, and was trying to cover his losses. He could be facing up to 20 years in prison, provided the charges are proved in US District Court in Chicago.

While cryptocurrencies are hot among the population in many countries, speculative trading involving Bitcoin and other cryptocurrencies have made governments and regulators in many countries wary about them. The meteoric rise in the price of Bitcoin, when it rose to US $ 20,000 in December 2017, and equally drastic fall in January and February of 2018, when it went down to US $ 6,000, lend credence to the apprehensions. Several countries have either fully or partially banned cryptocurrencies, including Iceland, Bolivia, Ecuador, Russia, Sweden, China, Thailand, and Bangladesh. The governments and central banks in these countries worry about the speculative trading and the possibility that significant part of their people’s savings may be drowned in cryptocurrencies, which are mathematical money and not backed by any tangible assets. In South Korea, where 20% of the global Bitcoin transactions take place, a tough stand was taken by the government in January 2018, when the government said they are considering banning cryptocurrencies altogether. Although the South Korean government has since then softened their stance, they are quite determined to regulate crypto trading, and want to seriously clamp down on cryptocurrencies being used for illegal activities. The South Korean government is especially worried that the youth in their country are increasingly taking to crypto trading, and the government fears that this may tempt them towards crime. In another example, the Government of India (GoI) has announced on the floor of the national parliament in February 2018 that they don’t recognize cryptocurrencies as legal tenders, and will do everything possible to stop funding of illegal activities using these.

The incident may bring spotlight back on security of cryptocurrencies, however, it’s clear that this was a case of an individual having the required authority to operate his employer’s crypto trading account, and misusing it. This wasn’t a case of hacking any crypto trading system, and you as a crypto trader are safe, as long as you follow the best practices, for e.g. regularly upgrading your knowledge about crypto trading, having good backup and encryption, having the right kind of cold storage wallet, staying away from mobile wallet except for very small amount of money, regularly patching your computer, having good anti-virus software, refraining from browsing internet from the same machine that you use for crypto trading, and using two-factor authentication.

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Author : Aaron

Crypto Enthusiast ! Leader in Blockchain. Senior editor since Nov 2017 and enjoy freelancing at Cryptonewsbytes.

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