The number of crypto scams in the industry continues to escalate as every day new reports unfold. While the crypto industry is still recovering from the massive Twitter hack that promoted a Bitcoin scam, a New York resident was recently arrested on charges of defrauding investors for more than $4.5 million in crypto assets.
Jae Woo Kim, a 27-year-old resident of New York City, was charged with one count of wire fraud, prosecutors U.S. Attorney David L. Anderson and the Federal Bureau of Investigation Special Agent John L. Bennett said in a criminal complaint filed on July 9.
Per the complaint, Kim lied about being a cryptocurrency trader to his friends and acquaintances starting in October 2017. He allegedly sought loans for crypto trading and business purposes.
However, the victims were unaware of the scam, and the filing states that the accused was using bitcoin and ethereum to finance transactions for the scheme, and transferred the funds he received in the form of crypto or U.S. dollars, to gambling websites outside the USA.
By May 2020, Kim had managed to convince the victims to loan him $4.5 million in crypto-assets, all of which were transferred to a sportsbook and casino located outside of the country.
He persuaded his victims by telling them that they were financing his fairly modest operation,” according to the FBI. Furthermore, he has also been trying to get loans from new investors since February 2020.
As of now, Kim is now looking at 20 years in prison and a hefty fine of $250,000, if found guilty.
Crypto scammers plague the industry
2020 has seen its fair share of crypto scams, and recently the Chinese police cracked down on a $14.31 million crypto scam in Wenzhou.
The scammers defrauded victims by telling them that they had profited from an “investment scheme” and all the victims needed to do was send crypto to a Huobi wallet address (fake), after which they’d receive a more substantial amount in Huobi Token (HT).
Prior to this, two brothers Sean Hvizdzak and Shane Hvizdzak were accused of operating multiple crypto scams stealing millions of dollars from the victims.
The accused defrauded investors by asking them to invest in a crypto fund, then lying about the performance of that said fund. The accused allegedly moved $26 million from the funds to their personal accounts at banks and into some well-known crypto exchanges like Binance, Gemini, and Bittrex.