SAN FRANCISCO – Douglas Jae Woo Kim has been charged in a criminal complaint with wire fraud in connection with a multi-million dollar scheme to raise money for bogus cryptocurrency investments announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John L. Bennett.
Kim, 27, of New York, NY, made his initial federal court appearance before U.S. Magistrate Judge Sallie Kim this morning to face the charge. The allegations describing the crime appear in an affidavit filed together with the complaint on July 9, 2020. According to the complaint and affidavit, Kim represented to friends and acquaintances that he was a cryptocurrency trader and requested loans for business purposes or to trade cryptocurrency. The complaint describes how Kim used cryptocurrencies, including Bitcoin (BTC) and Ether (ETH) to finance transactions as part of the scheme and how, on multiple occasions, he transferred some or all of the assets he received from his victims to online gambling sites operating outside the United States.
According to the affidavit, in October 2017, Kim contacted a victim by text message and said he was looking for investors interested in making what he called a short-term loan for a “fairly modest operation.” According to Kim, he was investing in a cryptocurrency operation in which he would make profit from fees charged to a peer-to-peer network and from exchange transactions. Kim represented to the victim that he already had $300,000 to $400,000 in financial holdings and that the operation “isn’t very risky to me.” Kim later emailed the victim details of the investment. Shortly after receiving cryptocurrency from the victim to finance the investment, Kim transferred about half of it to a bitcoin sportsbook and casino located outside the United States.
In an agreement dated January 1, 2018, Kim set out the terms of similar investment with a second victim. The agreement called for the victim to provide ETH valued at approximately $200,000. The same day, Kim converted more than half of the funds to BTC and, in the following days, transferred substantially all the converted cryptocurrency to his account with an offshore casino.
In the ensuing weeks and months, Kim convinced his victims to provide funds, all or part of which were transferred to cryptocurrency gambling sites. In sum, Kim convinced his victims to provide to him over $4.5 million. According to the affidavit, Kim’s victims all stated they would not have loaned money to Kim if they had known he was using the proceeds for gambling purposes.
Kim is charged with one count of wire fraud, in violation of 18 U.S.C. § 1343.
The complaint merely alleges that a crime has been committed, and Kim, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, he faces a maximum statutory penalty of up to 20 years in prison and a fine of $250,000 or twice the gross gain or loss resulting from the scheme. In addition, the court may order additional terms of supervised release and restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Kim’s next appearance is scheduled for August 19, 2020 before Judge Kim for status.
The prosecution is being handled by the Office of the U.S. Attorney, Northern District of California’s new Corporate Fraud Strike Force and is the result of an investigation by the FBI.