The US Commodity Futures Trading Commission (CFTC) has slapped an American crypto trader with a fine topping $1.1 million and a 15-month prison sentence for misappropriating Bitcoin and Litecoin from various people. Joseph Kim – the trader in question – defrauded his employer – a Chicago based trading firm – out of client funds topping $600,000 and transferred the money to his own crypto accounts. Kim claimed that problems with security protocols meant that he had to transfer the client’s funds to various accounts, but his employer was having none of his excuses and fired him on the spot.
Stealing More Money
After he was terminated from his job, he told investors that he voluntarily left to start his own crypto trading firm. He then proceeded to con $450,000 from five people and “lost” the funds in what he dubbed as high-risk bets that didn’t pay off. The CFTC ordered that Kim pays $1.1 million in restitution to the afflicted parties, he will also serve a 15-month jail sentence, as well as having a complete trading and solicitation ban placed on him.
CFTC Cracking Down on Crypto Fraud
When it comes to crypto fraud, the CFTC isn’t messing around. Earlier this month it said that Jacob Burrell Campos deserves up to five years behind bars for his illegal crypto trading habits. Campos sold cryptos via SMS to buyers at a severely inflated price when compared to the market figure, and then laundered the money through Mexico before importing it back into the US.
Crypto Hedge Fund Uprooted
The CFTC has also taken aim at crypto hedge funds. Back in October, it took down a hedge fund that was actually a Ponzi scheme run by Nicholas Gelfman. The firm and Gelfman have been fined a total of $2.5 million and Gelfman is banned from ever working as a trader or hedge fund manager for the rest of his life. The US Securities and Exchange Commission (SEC) has also been hard at work clamping down on crypto hedge fund scams. The SEC shut down two crypto hedge funds recently and fined the owners a total of $400,000
Collectively, the CFTC and SEC are taking no prisoners with its approach right now. With every drop of the axe, the crypto space in America becomes safer and more secure for genuine citizens looking for someone to manage their funds. The SEC is about to make a fresh ruling on Bitcoin ETFs and if it gives the go-ahead, we could see a new wave of fake ETFs going live, so everybody still needs to remain vigilant and diligent.