Two executives from South Korea-based digital currency exchange Komid have reportedly been sentenced to serve time in jail as they have been charged with “fraud, embezzlement, and misconduct”, according to local news outlets.

Found Guilty Of Manipulating Trading Volumes For Personal Gains

Choi, who is the CEO of Komid, was sentenced to 3 years in prison on January 17th. Meanwhile, the other executive, Park has been given a 2 year prison sentence after both men were found guilty of “orchestrating fraudulent trading volume reports on their platform.” Prosecutors claim that both Choi and Park were involved in a scheme in which they “fabricated” 5 million transactions on Komid, a crypto trading platform that both the executives manage.

The prosecutors alleged that the fake volumes were used to deceive traders into thinking the exchange was handling a large number of orders. As mentioned in court documents, the two executives earned around $45 million, mainly from exaggerating trading volumes on their digital currency exchange.

Committing Fraud Against “Countless Number Of Victims”

Commenting on the exploitative activities, the presiding Judge stated:

Choi has committed fraud for a countless number of victims for a long period of time…. Furthermore, he holds the financial authorities responsible for failing to keep track of the industry better.

Admitting to have engaged in fraudulent activities, Park revealed during the court hearing:

Choi entered false orders, then we repeated the process and fooled investors into thinking the transactions were authentic, organic trades.

Notably, an executive from another major Korean crypto exchange, UpBit was also indicted last month for entering false orders in order to artificially inflate trading volumes. Other staff members from UpBit were charged with allegedly creating fake membership accounts and then making deposits, in an attempt to deceive users.

Exploitative Bithumb Trader Generated $250 Million In Fake Volume

As CryptoGlobe reported in September 2018, Bithumb, one of South Korea’s largest crypto exchanges (in terms of trading volume), was being exploited by a user as they had regularly been generating $250 million in “fake volume” on the platform. Alex Krüger, an economist and market analyst, had pointed out that the millions in fake volume were being traded at Bithumb “every day at 11 AM Korean Time since August 25th” 2018.

The Argentinian digital currency trader explained that one particular user had been taking advantage of Bithumb’s promotional offer. The Korean exchange had been giving users up to 120% payback on all trading fees paid by users through airdrops on a “first come first served basis.”

The exploitative user had reportedly been trading with himself, in order to receive much larger paybacks. This process was described as being similar to “wash trading” as the user had continuously entered “two opposite limit orders.” The abusive activity reportedly allowed the trader to earn $150,000 per day, according to Krüger’s calculations.