Executives Of Komid Crypto Exchange Imprisoned For Faking Volume January 20, 2019 January 20, 2019 Kelly Cromley http://1AZFjzw2#Nwf63pYaMWq#xIY
Market NewsJanuary 20, 2019 by Kelly Cromley

Executives Of Komid Crypto Exchange Imprisoned For Faking Volume

Heads of two South Korean exchanges were supposedly imprisoned for artificially boosting the trade volumes on their exchanges. The duo allegedly used a bot to place huge orders both in cryptocurrencies and fiat currency (Korean won).

The South Korean exchange in question is Komid and according to The News Asia, the executives were imprisoned two days back “for their roles in orchestrating fraudulent volume reports on their platform.”

One of the CEOs identified to be Choi Hyunsuk was slapped with a three year sentence while the other executive was handed two years imprisonment, according to news publication Maekyung.

The news portal also pointed out that “This is the first time a representative of a virtual currency exchange has been sentenced to prison for allegedly inflating trading volumes.”

Komid went live after completing beta trials that began on January 5. Per the court, back in January last year Choi setup at least five fake accounts and artificially inflated trading volumes in both cryptocurrencies and Korean won.

The duo was imprisoned “for fraud, embezzlement, and misconduct.” On the arrest, the News Asia detailed as follows:

“The charges from prosecutors outlined a scheme wherein the two defendants fabricated 5 million transactions on their platform to deceive investors into thinking that the volume was natural. This led to the two earning about $45mil. There is also a suspicion that they utilized a ‘bot’ to automatically create large orders, which attracted new users.”

However, Edaily has highlighted that the judge considered the fact that the harm was minimal as some portion of funds were returned. Furthermore, the judge noticed that “the defendants did not appear to have committed a crime with strong fraudulent intentions.”

Nevertheless, he decided “The crime has damaged customers’ confidence in the virtual currency exchange and has had a negative effect on the domestic virtual currency trading market.”

It is a known fact that even during the early days of Mtgox, cryptocurrency exchanges have been busted for using automated programs to fake orders. Back in December, executives of Upbit, one of the largest cryptocurrency exchanges, were indicted for fraud. The exchange had allegedly placed fake orders to the tune of $226 billion, while selling 11,500 BTC to nearly 26,000 investors.

Upbit has dismissed the allegations. Other South Korean crypto exchanges which face similar charges include Coinnest, whose management was charged with bribery in September last year. Likewise, some of the employees of HTS Coin crypto exchange were taken into custody last September on charges of fraud.

AuthorKelly Cromley

Kelly is our in house crytpto researcher, delving into the stories which matter from blockchains being used in the real world to new ico coming out.