Executives of Coinup, a supposed South Korean exchange, have been handed jail sentences for scamming investors out of approximately 450 billion won ($385 million). The CEO and his executive board were given prison sentences ranging from six to sixteen years after an elaborate scheme which involved hosting so-called investment seminars and producing a fake magazine that turned out to be nothing more than a good old Ponzi scheme.
200% Return Within Weeks
The Coinup scam began in August 2018 when 53-year-old CEO Kang Seok-jung and his associates formed the exchange and set about corralling investors into handing over funds for the project, promising them up to 200% return within weeks. Investments were made through packages, with the more costly packages receiving the quickest return. However, after collecting the 450 billion won bounty, no work was ever conducted on the project and, in true Ponzi scheme fashion, the initial investors were paid out using contributions from later investors. Coinup held huge investment seminars to create hype about the product, and even went as far as producing a fake magazine with a Photoshopped image of Kang standing with South Korean President Moon Jae-in.
Judge Engages in a Bit of Victim Blaming
Kang and his executive board were arrested in March on suspicion of investment fraud and were found guilty on Tuesday. Judge So Byeong-seok sentenced Kang to 16 years in prison, with his CFO sentenced to 11 years. Other executives and their accomplices got between six to nine years each. Judge So wasn’t exactly full of sympathy for the duped investors, instead criticizing them for “investing heavily in the thought of obtaining high profits in a short time”, which to our knowledge is the first time a judge has engaged in victim blaming within a Ponzi scheme. Despite their lengthy jail sentences, Kang and his gang should feel fortunate that they didn’t end up like the ‘Lord of Ladysmith’, an African Bitcoin Ponzi scammer who ended up having his house burnt down by angry investors.