Joseph Kim, a young Chicago trader just pleaded guilty to stealing $3 million worth of cryptocurrency from the firm that employed him and investors. The case, which involves charges of wire fraud, is the first criminal prosecution for cryptocurrency related violations in the city.
The 23-year-old trader who appeared before Judge Andrea Wood, could potentially be sent to prison for as long as 20 years. He will be sentenced in October, and he may also be ordered to pay back over a million dollars in restitution.
According to the prosecutors´ allegations, the defendant took $3 million from his firm and over half a million from investors. His goal was to make up for losses he incurred due to disadvantageous trades made on his personal account. While he attempted to return some of the Litecoin and Bitcoin he stole from his firm, Consolidated Trading, he still owed over $1.1 million when the misconduct came to light.
A spokesperson for the defendant referred to his behavior as a series of “poor decisions” and said he would “work tirelessly to repay those whose money was lost."
Cryptocurrency has certain characteristics that make it especially vulnerable to theft. In fact, Kim apparently only began stealing from his firm after he was assigned to cryptocurrency trading, in 2017, roughly a year after he joined Consolidated.
As per firm rules, Kim should have stopped trading cryptocurrency through his personal accounts immediately after he was reassigned to the company´s crypto team, but an FBI investigation revealed he did not comply.
On several occasions, he transferred significant amounts of both Litecoin and Bitcoin to his own cryptocurrency wallet. When he was confronted about it by both colleagues and supervisors, Kim said he was making the illegal transfers for security reasons. But according to the FBI, on many occasions, he failed to give the cryptocurrency back.
After the owners of Consolidated found out about the missing funds, Kim told them in an email that it had not been his intention to steal from them, and that he had been “until the end... perversely trying to fix" what he had 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 added.
He was, of course, fired, and decided to go out on his own. Then, he convinced a handful of investors to give him over half a million dollars, which he lost after engaging in high-risk trades.
Kim may be the first individual to be prosecuted for stealing virtual currency in Chicago, but he will certainly not be the last. In the current scenario of increasingly stringent regulations, the cryptocurrency space is bound to see increasing scrutiny into trades, which may lead to more criminal prosecutions of this kind.
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