- An illegal XRP exchange operator in South Korea has been sentenced to eight years in prison for defrauding investors out of nearly $3.4 million.
- The operator falsely claimed to have a formal agreement with Ripple and Ripple Labs, the issuers of the XRP token.
- The operator also attempted to evade justice by skipping bail and going into hiding, but was eventually rearrested.
An illegal XRP exchange operator in South Korea has been sentenced to eight years imprisonment for defrauding investors out of nearly $3.4 million, highlighting the need for increased regulation and vigilance in the crypto space.
Illegal XRP Exchange Operator Sentenced
The unnamed operator was found guilty of defrauding investors out of nearly $3.4 million, with almost $2 million stolen from a single individual. The operator ran a domestic cryptocurrency exchange since 2015 and falsely claimed to have a formal supply agreement with Ripple and Ripple Labs, the issuers of the XRP token. The operator has the option to accept the verdict or appeal the judgment at the Supreme Court.
Deceptive Practices and False Promises
The operator convinced an individual, referred to as B in court documents, to invest around $2 million in 2015, promising them a 20% discount on the market rate for the coins. The operator further convinced B to keep the coins on the exchange’s platform. In 2017, B was told that they could increase their XRP holdings from 2.35 million to 3 million in three months by lending the coins to another victim (C). The coins were worth around $700,000 at the time.
Further Victims and Attempted Escape
The operator also defrauded another investor, referred to as D, by convincing them to hand over their XRP coins in a loan deal. Instead of repaying the loan, the operator traded D’s XRP for Bitcoin and transferred the BTC to a wallet registered in his son’s name. The operator also attempted to evade justice by requesting a postponement of the sentencing date and asking for time to compensate for the damage. When judges granted his requests, he used the opportunity to skip bail and go into hiding, before being rearrested two years later.
Conclusion
This case highlights the need for increased regulation and vigilance in the cryptocurrency space to protect investors from fraudulent operators. The severity of the sentence reflects the seriousness of the crime and the damage inflicted on the victims. It serves as a stark reminder of the risks associated with investing in unregulated exchanges and the importance of conducting thorough due diligence before investing in cryptocurrencies.
