Man Charged With Defrauding $4.5M in Crypto to Fund Gambling Habit

The New York man asked investors for loans for what he called a low-risk investment, but the DOJ said most of the money was sent to offshore gambling sites.

Jul 16, 2020 at 9:27 a.m. UTC
Updated Sep 14, 2021 at 9:31 a.m. UTC

A 27-year-old has been accused of defrauding investors into sending him millions of dollars in cryptocurrencies that he used on offshore gambling sites.

  • A criminal complaint filed July 9 at the U.S. Attorney's Office charges Douglas Jae Woo Kim, who is based in New York, with wire fraud, alleging he conned three investors out of more than $4.5 million worth of bitcoin and ether.
  • The Department of Justice (DOJ) claims Kim told investors he was a cryptocurrency trader and asked for loans for a low-risk investment he claimed he had already invested $300,000 to $400,000 into.
  • The DOJ alleges that after receiving the funds, Kim sent either all or a substantial amount to offshore crypto gambling websites, Nitrogen Sports and Fairlay.
  • Between October 2017 and May 2020, the complaint says Kim convinced three investors to transfer a total of 123 bitcoin (~$1.1 million), 15,252 ether ($3.5 million), as well as approximately $30,000 in USD.
  • Although Kim promised loans would be repaid with high-levels of interest, the DOJ says that most of the bitcoin and all of the ETH has yet to be refunded.
  • Only one investor, so far, has been fully repaid.
  • Per an affidavit from the Federal Bureau of Investigation (FBI), none of the investors had any idea their money was being used on gambling sites.
  • The FBI also says Kim has been trying to convince new investors for loans since February 2020.
  • The DOJ has charged Kim with one count of wire fraud; he appeared before magistrates to face the charge on Wednesday.
  • If convicted, he faces up to 20 years in prison and a $250,000 penalty.

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