The nearly 10-year-old cryptocurrency space has reached one of the more ignominious milestones to date.
Several months after the SEC filed the first civil fraud action against an ICO founder who was believed to have stolen money from investors, US prosecutors are sending a message to the community by filing the first case of a criminal fraud prosecution in blockchain history, according to federal prosecutors in Chicago.
Prosecutors are expected to outline the charge that “from September through November 2017, Kim transferred more than $2 million of the trading firm’s Bitcoin and Litecoin to personal accounts to cover his own trading losses, which had been incurred while trading cryptocurrency futures on foreign exchanges.”
But unlike the previous civil actions, the criminal case involves an employee at a blockchain startup who stole from his employer to fund a severe gambling problem, according to ABC 7.
According to a local Chicago television station, a 24-year-old trader named Joseph Kim considered himself “invincible” according to federal investigators. The trader was charged after allegedly siphoning $2 million in bitcoin and litecoin away from his Chicago-based employer.
Kim, who’s biography identifies him as a 2016 graduate of University of Chicago, is charged with fraud against Consolidated Trading LLC. Kim illegally transferred the firm’s cryptocurrency to his own personal accounts, according to federal investigators, to cover trading losses.
The Korean-American then lied about the transfers and tried to cover up the illegal trades by repaying some of the funds, prosecutors claim.
According to a federal complaint, Kim referred to himself as “DEGEN”, short for “degenerative gambler.”
In an email to his bosses last November, Kim allegedly admitted to the scheme. “It was not my intention to steal for myself” he is quoted as writing. “Until the end I was perversely trying to fix what I had already done.”
“I can’t believe I did not stop myself when I had the money to give back, and I will live with that for the rest of my life,” he said, according to prosecutors.
Kim was hired as a trader in July 2016. In an email last November to the firm’s top executives authorities say Kim apologized and said he was “sorry to betray you all like this.”
Yet it was Consolidated’s management team that discovered the misappropriation.
Kim made his initial court appearance on Friday at 10:30 am before Magistrate Judge Daniel G. Martin at the Dirksen Federal Building.
via Zero Hedge http://ift.tt/2o4Mcak Tyler Durden