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Bogus Crypto Bank Chief Jailed for 10 Years After Duping Investors out of $181 Million

Tim Alper
Last updated: | 1 min read
Source: Wit/Adobe

The CEO of a bogus South Korean crypto bank has been handed a 10-year jail term – after cheating investors out of a total of $181 million.

The news outlets Chosun and Newsis reported that the CEO (surnamed Ko) led a firm named QRC Bank. Ko was convicted of fraud and other charges. Two other QRC executives were also jailed, one for five years and the other for three.

A branch of the Seoul Central District Court Criminal heard that Ko had also headed two associated companies, named QRC Korea and Worldchain. The court heard that Ko and the executives had used these companies to give their scam a veneer of authenticity.

Ko and his associates had claimed that QRC Bank was an “integrated financial platform” that used cryptoassets to power remittances, exchanges, and payments. The court heard that around 5,400 people invested in QRC-related programs.

The court also heard that Ko began his program in December 2019, and had “deceived investors” by “guaranteeing them 300% returns on their crypto-related investments.”

But, like many similar schemes, the companies were, in fact, a front for a Ponzi operation: Ko actually paid older investors’ returns using newer investors’ money.

Rise in Bogus South Korean Crypto Banks and Exchanges

Ko and the executives also sold around $4 million worth of “shares” in QRC Bank, with Ko insisting that shareholders could expect lucrative payouts when the company expanded overseas. Ko told investors that QRC Bank was set to be listed on the NASDAQ exchange in the United States.

The presiding judge, Park Seol-ah, was quoted as stating that Ko and the other defendants had “deceived a large number of investors and defrauded large amounts of money.”

Park added:

“The victims suffered serious economic and psychological damage when they invested their hard-earned money.”

If Ko and the executives appeal the verdict, the case will be taken to the High Court – with a third and final trial to be held in the Supreme Court.

In January, the Supreme Court sent the head of V Global – a fake crypto exchange that also duped thousands of investors – to prison for 25 years.