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8 South Korean Crypto Exchange Execs Jailed in USD 386m Fraud Wrap

8 South Korean Crypto Exchange Execs Jailed in USD 386m Fraud Wrap 101
Source: iStock/st_lux

A court in South Korea has jailed the head of cryptocurrency exchange Coinup for 16 years, after convicting him of fraud. Eight other executives from the exchange were also given jail time, with the company’s vice president given an 11-year prison term.

The Seoul court ruled that Coinup’s CEO, “Cash Kang” (real name Kang Seok-jung), was guilty of cheating hundreds of investors out of a total of over USD 386 million in one of the most audacious cryptocurrency-related fraud schemes in South Korean history.

As part of a campaign that began in 2018 and was shut down by police in February this year, Kang and his associates created fake images featuring massive overseas data centers, a fake video and English-language news platform – and even photoshopped and distributed a picture of Kang standing next to a smiling South Korean President Moon Jae-in onto the cover of bogus magazine, per Ilyo Seoul.

8 South Korean Crypto Exchange Execs Jailed in USD 386m Fraud Wrap 102
Source: Coinup "marketing materials" screenshot

The company made bold promises about the lucrative rewards its investors could expect, and even received mainstream media coverage when Coinup organized a meeting for potential investors at South Korea’s leading convention center, the COEX in Seoul, at an event with an estimated 5,000 attendees.

However, the court also hit out at the investors, stating, per Yonhap,

“The victims are also responsible for the scale of the damage. They investing excessively in the hope of obtaining high returns over a very short period of time."

The police investigation saw some 60 Coinup employees arrested. Of the six subsequently charged and found guilty aside from the CEO and vice president, the court handed out jail terms of six to nine years.

The court heard that Kang and his associates used investor funds to make a series of investments in seemingly worthless tokens, and awarded themselves a healthy share of the money they received.

Despite amassing some USD 386 million, MBC reports that the police were only able to seize some USD 258,000 worth of assets from Coinup.

The presiding judge told the court that Coinup’s scam was “highly organized and paid great attention to detail."

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