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.
- 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.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.