U.S. District Judge Andrea R. Wood sentenced Joseph Kim from Phoenix, Arizona, to 15 months behind bars for wire fraud in the first Chicago criminal prosecution related to cryptocurrency.

Kim faced charges at the beginning of 2018 when federal prosecution registered the first criminal case involving the cryptocurrency trading industry from Chicago, with Kim pleading guilty to one count of wire fraud in May.

Kim received the 15 months jail punishment for embezzling $1.1 million worth of Bitcoin and Litecoin cryptocurrency from two different proprietary crypto trading companies.

As stated in the Department of Justice press release, "Over a two-month period in the fall of 2017, JOSEPH KIM, 24, of Phoenix, Ariz., misappropriated at least $600,000 of his trading firm’s Bitcoin and Litecoin cryptocurrency for his own personal benefit."

This happened while Kim was employed in an assistant trader role by Consolidated Trading LLC which subsequently terminated him.

Kim started the cryptocurrency fraud scheme to cover foreign exchange losses

Moreover, Kim moved considerable sums of Consolidated’s Bitcoin and Litecoin crypto funds to his own personal accounts as a measure designed to cover losses he incurred while trading cryptocurrency futures on foreign exchanges.

As a concealment tactic, Kim lied to the firm’s management about both trading of the company’s cryptocurrency and the location of the company’s cryptocurrency.

Kim moved on to another trading group where he took part in another cryptocurrency fraud scheme which ended up with him losing $545,000 while acting as a crypto trader for five different investors.

Out of the five individuals Kim defrauded, four testified at the sentencing hearing about their losses on Friday, before the U.S. District Judge Andrea R. Wood.

“It is important that the public know that despite the complexity of cryptocurrency trading, the criminal justice system will hold traders and investment professionals accountable for cheating and stealing,” said Assistant U.S. Attorneys Sunil Harjani and Sheri Mecklenburg in the sentencing memorandum.