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.

Read more about

Scams Legal CoinFlash

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.