On Friday, April 2, 2021, the United States Department of Justice (DOJ) charged fugitive South Korean cryptocurrency executive Do Kwon with eight counts of fraud related to a “multi-million dollar fraud scheme.”
Kwon was the former CEO of Korea Financial Investment Association, a Korean-based investment firm, and Linkcoin, a cryptocurrency exchange. He fled to Singapore shortly before Korean authorities began investigating him for fraud.
According to a DOJ press release, Kwon “defrauded investors by providing false and misleading information about the company’s financial condition, raising funds from investors with no intention of using the funds to develop a functioning cryptocurrency exchange, and misappropriating investor funds.”
The charges allege that Kwon and his Hong Kong-based partner Pyun Soo Kim raised more than $20 million dollars from thousands of investors in Korea. Kwon is accused of falsely claiming that Linkcoin was affiliated with Korea Financial Investment Association and that the money raised would be used to develop a functional cryptocurrency exchange.
Instead, the money was allegedly used to pay off other investors, buy luxurious cars, and other personal expenses.
The indictment charges Kwon with four counts of mail and wire fraud and four counts of money laundering.
The Department of Justice will be working with the Republic of Korea to prosecute Kwon to the fullest extent of the law. If found guilty, Kwon could face up to 20 years in prison for each count of fraud and money laundering.
Kwon’s case is a stark reminder that fraud in the cryptocurrency space will not be tolerated, and that investors should always protect themselves by thoroughly researching any investment before entrusting funds to a company.