Bitsonic Executives Face 8 Years for Theft of $7.5M: Report

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The chief executive officer and vice president of technology of digital asset trading platform Bitsonic have been sentenced to a total of eight years behind bars for stealing 10 billion South Korean won ($7.5 million) deposited by the users of the exchange.

Notably, the digital asset sector has come under the scrutiny of regulators around the world after the collapse of multiple firms like Three Arrows Capital (3AC), Terraform Labs, and the crypto exchange founded by Sam Bankman-Fried, FTX.

Bitsonic Execs Behind Bars

South Korean media outlet Yonhap News Agency noted in a report on Tuesday that the CEO of Bitsonic, Jinwook Shin, and the technology chief, only reported as Mr. A, have been sentenced to eight years and one year, respectively. 

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The Seoul District Court sentenced the two Bitsonic executives. The chief executive was arrested on August 7, 2023, and charged with fraud, forging and falsifying records, and obstructing a business via computer.

Trust in Crypto Exchanges ‘Greatly Damaged’

As per the court, trust in digital asset trading platforms “has been greatly damaged” by the actions of Shin and Mr. A, who misused Bitsonic. The court added that the pair were “avoiding responsibility and showing no remorse.”

It is important to note that Mr. A was given one year behind bars on a charge of obstructing a business via computer. The court has confirmed that a “significant amount” of customer funds has not been recovered.

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As reported earlier, South Korean authorities have partnered with the top five exchanges in the region to combat crypto crimes and track transactions, improving surveillance.

Manipulation of Transaction Volumes by Bitsonic Exec

Notably, the court said that between January 2019 and May 2021, the chief executive of Bitsonic had manipulated transaction volume on the exchange. He used the funds deposited by customers to manipulate the transaction volume of the native token of the exchange and inflate the prices. 

Shin was also found guilty of depositing fake won on the digital asset trading platform to make it appear that he had deposited cash. In order to artificially inflate exchange prices, Bitsonic’s VP of Technology developed a program that bought the cryptocurrency Shin owned.

False Ads

As pointed out by the court, Shin also made a fake announcement via social media that his crypto exchange had partnered with another international exchange. 

Interestingly, Bitsonic collapsed when users were unable to retrieve the money that they had deposited on the platform, as Shin had successfully siphoned off $7.5 million in user assets. The exchange shut down in August 2021, claiming “internal and external issues.”

Authorities in South Korea have been heavily cracking down on the money hoarded by Terraform Labs, recently seizing significant assets worth over $160 million from eight people linked to the demise of the Terra ecosystem.

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