Crypto Exchange Execs Land 8-Year Jail Term for Embezzling Millions of Customer Deposits

A South Korean district court has sentenced the CEO and CTO of cryptocurrency exchange Bitsonic to eight years in prison for stealing millions of dollars in customer funds.

According to a report from Yonhap News Agency, Chief Judge Lee Jong-chae sentenced Bitsonic CEO Jinwook Shin and CTO – identified as Bae – to seven and one year behind bars, respectively, during the first trial of the case at the Seoul Eastern District Court Criminal Agreement Division 12 on February 6.

Bitsonic CEO Sentenced to Seven Years Behind Bars

Shin was found guilty of fraudulently manipulating cryptocurrency prices and trading volume on Bitsonic from January 2019 to May 2021 using the buyback method. The technique involved buying back a substantial quantity of the Bitsonic Coin (BSC) to raise the token’s price.

Besides using the buyback method, the CEO entered false Korean Won points into the Bitsonic system to create an illusion of the exchange receiving heavy deposits. However, the opposite was the case.

With these techniques, Shin recruited about 101 investors from whom he stole cash and crypto deposits worth 10 billion won ($7.5 million). The court indicted the Bitsonic executive on charges of fraud, falsification of prior self-records, obstruction of business by computer, and forgery of prior self-records.

“Trust in virtual asset exchanges, which must be operated based on trust between operators and users, has been greatly damaged. Nevertheless, they are avoiding responsibility and showing no remorse, and even a significant amount of the damage has not been recovered,” the judge said.

Bitsonic’s Issues

On the other hand, Bae was sentenced on charges of obstruction of business due to computer disorders as he created and operated a program that allowed Shin to execute the buyback method.

“Using his position as a coin exchange operator and manager, he neutralized the essential information processing function of the virtual asset exchange and created the appearance that the transaction volume, in this case, was increasing through normal transactions. More than 10 billion won was swindled from numerous victims,” the judge added.

South Korean authorities arrested Shin in August 2023, two years after Bitsonic announced the shutdown of its operations due to “internal and external issues.”