The CEO of Bitsonic, a cryptocurrency exchange, has been handed a seven-year prison sentence, while the company's technical head received a one-year sentence for embezzling 10 billion won ($7.5 million) worth of customer deposits. According to a report by South Korean media Yonhap News Agency on February 6, Shin Jin-wook, the CEO, was arrested on August 7, 2023, and faced charges of fraud, falsification of records, tampering with records, and computer obstruction of business. Bitsonic's vice president of technology, identified only as Mr. A, was also found guilty of obstructing business via computer and sentenced to one year in prison.
The Seoul District Court condemned Shin and Mr. A for causing significant damage to trust in cryptocurrency exchanges, noting their evasion of responsibility and lack of remorse. The court revealed that between January 2019 and May 2021, Shin manipulated Bitsonic's trading volume by using company funds to buy his own tokens, artificially inflating their prices. Additionally, he deposited counterfeit Korean won into the exchange's system to create the illusion of legitimate cash deposits. Meanwhile, Mr. A devised a program to boost the price of cryptocurrency held by Shin by executing purchases on the exchange.
The fraudulent activities orchestrated by Shin and Mr. A were further compounded by a false announcement posted on Bitsonic, claiming a partnership with an international exchange. However, the scheme unraveled when investors were unable to withdraw their funds, as Shin had misappropriated $7.5 million of client deposits. As a consequence, Bitsonic ceased operations in August 2021, citing internal and external issues.
In a separate development on February 6, the Seoul Prosecutor’s Office arrested the CEO and two other executives of Haru Invest, a cryptocurrency earnings platform. The three individuals were accused of embezzling 1.1 trillion won ($830 million) worth of cryptocurrency from 16,000 users between March 2020 and June 2023. Prosecutors allege that much of the misappropriated funds were reinvested during this period, leading to the suspension of withdrawals from the platform in June 2023.
