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Man charged for multi-million dollar crypto scheme

Douglas Jae Woo Kim is charged with wire fraud after soliciting money from family and friends and funneling over half of it into online gambling sites

Douglas Jae Woo Kim of New York City was arrested last Thursday, July 16th, on charges of wire fraud in connection to a scheme that planned on defrauding investors out of $4.5 million in crypto assets.

According to the news release by the United States Attorney’s Office, Northern District of California, 27-year-old Kim led his friends and family to believe that he was trading cryptocurrencies and requested loans for business purposes, so as to help him conduct more trades.

The report provides an outline of how Kim used Ethereum and Bitcoin to finance transactions for the scheme. It also explains how Kim transferred victim funds to online gambling sites without their knowledge on more than one occasion.

The complaint describes Kim contacting one of his victims in October 2017 requesting a short term loan for what he described as a “fairly modest operation” in the crypto sphere. Kim managed to convince the victim that he had already earned  between $300,000 to $400,000 from similar operations and assured the victim that the scheme “isn’t very risky”.

After Kim received funds from the victim, he proceeded to transfer around half of the bitcoin to a casino and a sportsbook located outside the United States.

The release reveals how Kim managed to raise more than $4.5 million from his victims in crypto assets, with nearly all of these funds being funneled into gambling sites.

The defendant has been charged with one count of wire fraud and if convicted, faces up to 20 years in prison.

Last May 2020, a Vitalii Antonenko, also from New York City, was charged with hacking, trafficking in stolen credit card data, and laundering money with Bitcoin. The 28-year-old was arrested and detained on money laundering charges upon his arrival at New York’s JFK airport from Ukraine in March 2019, after two undercover agents managed to link Antonenko to two Bitcoin wallets that were used in transactions totaling $94 million.

The indictment details how Antonenko, alongside several co-conspirators, combed the internet looking for vulnerable computer networks that were likely to contain credit and debit card details.

Once obtained, the group sold the stolen information through markets on the darknet, where all manner of illegal drugs, firearms, and data are trafficked. Chainalysis, a cryptocurrency, and blockchain analysis firm, observed that criminal activity using Bitcoin hit an all-time high last January.

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