South Korean Exchange Chief Busted for Running a Ponzi SchemeAuthor: Jimmy AkiLast Updated: 15 November 2019 Kang-mo, the chief executive of South Korean cryptocurrency exchange CoinUP, has been arrested by local law enforcement authorities after he was rope n as the pre suspect in a fraud case.According to a November 11 report from local news source Yohanp News Agency, Kang-mo and several executives at the company are being charged for defrauding investors to the tune of 450 billion won (about $384 million). The exchange told its investors that they would be getting about 200 percent in returns on their investment after between 4 to 10 weeks of making investments in some of their products through the platform. An everyday Ponzi schemePer a separate account from the MBC Newsdesk, the exchange also sold a product which was described as a world currency exchange coin, adding that it would purchase it from them for 1.5 times the original price. However, as it turned out, the investment scheme they ran was no more than a Ponzi scheme petty, as investors immediately began to rack up losses on their portfolios. “They used a multi-level organization to run a “blocking” approach that ensured the profits of those who invested earlier with the money from those who later invested. This operation resulted in an overall damage scale, “Yohanp added. In a raid of the company’s offices, law enforcement discovered a fake magazine, where Kang-Mo was pictured standing next to South Korean Present Moon Jae-In. The company supposedly use magazines such as these to convince people that their investment products were legitimate and endorsed by the country’s government.For his part, Kang-mo was sentenced to 16 years by Deputy Judge So Byeong-Seok of Seoul Central District Court’s 24th Criminal Agreement. Also, Mr. Kwon and Mr. Shinmo, two men who were identified as Chief Financial Officers at the exchange, were also given an 11-year prison sentence. In addition to their sentences, a separate man named Yunmo, who was identified as the governor of the exchange, was sentenced to 7 years behind bars, along with his mother-in-law, who held the position of Vice President Whether or not the exchange will remain standing after this is still up in the air, but given a scandal of this scale, it is rather safe to assume that it will be shutting its doors anytime soon. Circle Society and David Saffron Ponzi schemes and other associated scams have continued to thrive in the crypto space this year. While authorities have cracked down on hackers and cyber attackers who use crypto to conduct their operations, scams that dress themselves up as legitimate businesses have usually had success with milking money off their victims before being eventually caught. Last month, the United States Commodity Futures Trading Commission (CFTC) announced that it was leveling charges against Circle Society, accusing them of “fraudulent solicitation, misappropriation, and registration violations relating to an $11 million binary options scheme.” According to the announcement, the defendants had misappropriated no less than $11 million worth of Bitcoin and dollars from their victims, promising to help the trade binary options on foreign currencies and crypto trading pars. They were also accused of duping about 14 Americans by merging them into a pool operated by the Circle Society, which guaranteed as much as 300 percent returns. However, company CEO David Saffron reportedly retained this cash in his wallets and used it to pay new participants.