The CEO of South Korean cryptocurrency “exchange” CoinUp has been sentenced to 16 years prison for his role in defrauding investors out of 450 billion won ($384 million), Yonhap News reports.
Mr. Kang-mo, alongside a raft of his executives, were found to have deceived thousands of CoinUp customers by promising returns of up to 200 percent on cryptocurrency investments, just 4-to-10 weeks after purchase.
A judge also sentenced the firm’s chief financial officers, Mr. Kwon and Mr. Shinmo, to 11 years in prison. CoinUp’s “governor” Mr. Yunmo was given 7 years imprisonment, alongside his mother-in-law.
Several other executives were reportedly sentenced to between six and nine years in prison.
CoinUp promised crypto prices would increase after listing
The investments CoinUp execs shilled had little-to-no chance of increasing in value. Local outlet TVCC reported that CoinUp execs would convince their victims to invest by promising to list the coins in the near future.
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Even more curious, investigators found that Kang-mo had displayed a fake magazine in CoinUp offices that showed him standing alongside South Korean president Moon Jae-in, presumably in a bid to mislead potential investors.
The Seoul Central District Court noted CoinUp operated as a multi-level organization that ensured those who invested early were rewarded directly with the profits generated by those who invested later — which bears the hallmarks of a classic pyramid scheme.
Earlier this year, South Korean police employed a special “artificial intelligence investigator” to identify investment scams, leading them to arrest the masterminds of a $19 million Bitcoin-fueled Ponzi scheme.
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