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Bitsonic Executives Found Guilty of Embezzling $7.5 Million, Sentenced to Jail

Legal reckoning for Bitsonic leaders

The Seoul District Court has delivered its verdict on the executives of the crypto exchange Bitsonic. The CEO, Jinwook Shin, has been sentenced to seven years in prison, while the firm’s vice president of technology, known only as Mr. A, received a one-year jail term. Their crimes include the theft of 10 billion South Korean won ($7.5 million) from customer deposits, a fraudulent act that has significantly eroded trust in digital currency exchanges.

Yonhap News Agency reported that Shin was arrested and charged with fraud, forging and falsifying records, and obstructing a business via computer. 

The report detailed:

"The court said trust in crypto exchanges 'has been greatly damaged' by Shin and Mr. A, adding that the pair were 'avoiding responsibility and showing no remorse.' It added a 'significant amount' of customer funds had not been recovered," 

From committing a financial crime to seizing operations: The downfall of Bitsonic

Between January 2019 and May 2021, Shin engaged in deceptive practices to manipulate transaction volumes on the exchange. By using Bitsonic's funds to buy its own token, he artificially inflated its price. Additionally, Shin deposited fake won into the system, creating the illusion of legitimate cash deposits. Mr. A contributed to these manipulations by creating a program that inflated prices on the exchange by purchasing cryptocurrency held by Shin.

Their scheme was exposed when investors were unable to withdraw their funds, leading to the discovery that Shin had siphoned off $7.5 million in customer funds. Following these revelations, Bitsonic ceased operations in August 2021, citing "internal and external issues."

This case highlights a broader issue within the cryptocurrency industry, as trust in exchanges continues to be a major concern. Notably, on the same day as the Bitsonic verdict, Seoul prosecutors arrested executives from the crypto yield platform Haru Invest for allegedly misappropriating $830 million worth of crypto from users, underscoring the critical need for stringent oversight and regulatory compliance in the sector.