According to the report, several officials (60 to be more precise) from the CoinUp cryptocurrency exchange were arrested for a fraudulent crypto-related scheme. Following this, the South Korean court in Seoul, convicted the head of CoinUp, Kang Seok-Jung alias ''Cash King'' has been sentenced to 16 years. Kang was convicted of cheating regarding investors in a total amount of over $386 million.
Apart from Kang seven other senior executives also bagged prison terms. The company’s vice president received a 7-year sentence while another high-ranking member of the exchange bagged an 11-year sentence. Other indicted senior executives saw prison terms between six and nine years.
''They claimed that the value of the cryptocurrencies they indicated would increase significantly and that if they invested in packaged products, investors would see returns of up to 200% after 4 to 10 weeks. This might also be known as a ‘Pump and Dump’ scheme.'' - court said.
Investigations revealed that those claims were made mostly to mislead investors and pilfer money from unsuspecting individuals. They used a multi-level organization to run a “blocking” approach that ensured the profits of those who invested earlier with money from those who later invested. This operation resulted in an overall negative return; it was a Ponzi scheme.
While delivering judgment, the court also blamed investors for not doing enough due diligence, hence making themselves easy prey to such fraudsters.