[2018-02-16] Trader at Chicago Firm Stole Millions in BTC,Faces 20 Year Sentence

[moriskarlov]

Late 2017 will long be remembered as the time when bitcoin went mainstream. Prices were mooning, and the general atmosphere was one of fear of missing out. That sentiment was especially true in trading circles, and more traditional outlets were experimenting with cryptocurrency divisions in order to take advantage. One such experiment went sour, as a trader attempted to play upon relative company ignorance by shorting bitcoin and covering personal margin calls, with the affair ending in million dollar losses and a first of its kind federal prosecution.

Bitcoin Trader Faces 20 Years in Prison

Consolidated Trading, LLC’s Joseph Kim, according to federal authorities, emailed, “Until the end I was perversely trying to fix what I had already done. I can’t believe I did not stop myself when I had the money to give back, and I will live with that for the rest of my life. You have every apology I have to give, I am sorry to betray you all like this.”

John R. Lausch Jr, United States Attorney for the Northern District of Illinois in conjunction with the Federal Bureau of Investigation (FBI), insists Mr. Kim “worked as an assistant trader for…a Chicago trading firm that recently formed a cryptocurrency group to engage in cryptocurrency trading…Over a two-month period in the Fall of last year, Kim misappropriated at least $2 million of the firm’s Bitcoin and Litecoin cryptocurrency for his own personal benefit, and he made false statements and representations to the company’s management in order to conceal the theft.”

According to reports, Mr. Kim had previous experience in cryptocurrency by way of working in South Korea for a time after graduating from the prestigious University of Chicago. He joined Consolidated in the Summer of 2016 as an assistant bond trader. Employees describe him as having gone by the online name “degen,” as in ‘degenerative gambler’.

It’s the first federal criminal prosecution of its kind in Chicago, and Mr. Kim, 24, is being charged with one count of wire fraud punishable by up to 20 years in prison. U.S. v. Kim, 18-cr-107, states “from September through November 2017, Kim transferred more than $2 million of the trading firm’s Bitcoin and Litecoin to personal accounts to cover his own trading losses, which had been incurred while trading cryptocurrency futures on foreign exchanges.”

Learn more: https://news.bitcoin.com/trader-at-chicago-firm-stole-millions-in-btc-faces-20-year-sentence/

[CryptoBry]

The BIG lesson here is quite clear: Don't play with cryptocurrency using the money of other people because once there will be a downtrend and you are not able to recoup what is lost you just literally hang your own neck by suicide. I have heard similar stories before and the underlying reason is always greed which can also be true with many traders (using their own money). Trading is always risky though can be rewarding if one has the amount of skills and knowledge as well as some luck on the side. It is just human nature to want more but we also have to use our rational decision-making process on such a situation. 

 

[FirEaSeA]

A gambler will always be a gambler so never entrust a bagful of money to them or else.

[jseverson]

The BIG lesson here is quite clear: Don't play with cryptocurrency using the money of other people

True, but I'd say that it could be condensed further to say: Don't play with other people's money.

It's great that he got caught, but I hope trading firms put security measures in place to prevent similar activity in the future. I'm just glad he didn't lose an amount big enough for their actual clients to suffer the losses.

[xdrpx]

This is one important reason why companies should probably setup a multi-signature Bitcoin address(es) and only upon consent of all the officials involved should the funds be moved from the companies accounts. The issue here was Kim alone had access to peoples Litecoins and Bitcoins and was easily able to access them to use it for personal trading. Before entrusting your funds with any company, always research and ask information on how they store your funds. Without a transparency report it's always a risk maintaining or managing your portofio of cryptocurrencies with a third-party. Also, I was wondering if the court would allow such crimes to be bailable? Like can the individual stay out of prison by paying a huge sum of penatly?

[jjacob]

The case is the first involving Bitcoin, but traders at financial institutions have tried similar stunts over the years. Existing financial institutions have developed a deep set of checks and balances to monitor traders. Occasionally, rogue traders do get the better of banks, but at least some checks are in place. Unfortunately, Bitcoin is a new asset class and some trading companies are going to get burnt before monitoring systems are in place.

[Samarkand]

...

According to reports, Mr. Kim had previous experience in cryptocurrency by way of working in South Korea for a time after graduating from the prestigious University of Chicago. He joined Consolidated in the Summer of 2016 as an assistant bond trader. Employees describe him as having gone by the online name “degen,” as in ‘degenerative gambler’.

...

What could possibly go wrong if you hire a guy, who uses an online screenname like this?

I suspect that incidents like this will happen more frequently in the future, because of the
crazy volatility and the lack of understanding of the technology that many still have.
If the cryptocurrency fund would have put sufficient safeguards in place this would have never happened.

[Uzunhahn]

Than thank god for cryptocurrency.
I don't need a trader to deal with my own investment now.

[Qartersa]

This misappropriation commonly happens when you are eager to win back all your losses even if you do not have sufficient liquid to trade or gamble any further. I see Mr. Kim presupposed he can get back his losses but the demand for the misappropriated amount came even before he was able to recoup all his trading losses. Thus, now he is being held liable. I guess the situation would be different had he been able to get back all his losses. Thing is, in Bitcoin and other cryptos alike, you are really unsure when prices will spike or dump. Hence, you should be guarded by your every move. Another takeaway here is to never try to commit into something you are uncertain about because chances are, you will never be able to get back what you have invested.