15 months in prison for man convicted in city’s 1st Bitcoin prosecution
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A University of Chicago economics grad who hoodwinked his former employer and other investors out of millions of dollars — much of it in cryptocurrency — was sentenced to 15 months in prison Friday.
U.S. District Judge Andrea Wood handed down the sentence to Joseph Kim at the conclusion of a 2 ½-hour hearing, during which Kim apologized to his victims.
Kim was also ordered to pay back $1,146,000 that he defrauded from the downtown investment firm he previously worked at, as well as several other people he took money from.
Prosecutors asked for Kim to be sentenced to at least four years in prison, while Kim’s defense attorney asked for six months.
“I betrayed your trust with my desperate actions,” Kim said to those he defrauded. “I’m still desperately trying to make things right.”
Federal prosecutors charged Kim, 24, with wire fraud last February. He was the first person in Chicago to be charged with wire fraud related to cryptocurrency.
In September 2017, managers at Consolidated Trading LLC moved Kim from their bond group to a new cryptocurrency group as the company ventured into the industry, according to the criminal complaint.
Kim soon transferred 980 Litecoins valued at $48,000 from a Consolidated account to his personal account, prosecutors said. Kim told a curious company director that he made the transfer only as “an intermediary holding space” for safety reasons, prosecutors said.
By the end of November, he had pocketed more than $3.2 million in Bitcoin transfers from company accounts to cover his own trading losses, though he returned about $1.2 million of it, prosecutors said.
Kim was fired from Consolidated and he then moved back to Arizona, where his parents live. Once there, he recruited others to give him money to invest — several hundred thousand dollars — which he then lost.
Some of his victims, including his former employers, took an opportunity to address Wood and detail the hardships they’ve undergone as a result of Kim’s scheme.
“Some people steal with a gun, some people steal with a computer,” said Colby Lamberson, one of the founders of Consolidated Trading. “He stole this Bitcoin, betrayed our trust and lied about it.”
Lamberson told Wood that he believed Kim should serve jail time, but added that he “hope[s] he becomes a productive member of society.”
All told, four of Kim’s victims took the chance to address the court. Kim sat and stared at the defense counsel’s table for the majority of their time speaking.
Assistant U.S. Attorney Sunil Harjani painted Kim as a fraudster motivated purely by his own self-interest who “richly deserves” a multi-year prison sentence.
“[Kim’s] character is one of greed and one of selfishness,” Harjani said. “The motivation is about him, his selfishness, his greed.”
Kim’s attorney, William Ziegelmueller, noted that, while Kim may have defrauded people of millions of dollars, he did not spend any of it on himself because it was all lost.
“The whole reason he did what he did … was because he had a big debt,” Ziegelmueller said. “He was desperate about it. He didn’t know how to react.”
“Mr. Kim’s intent was always to invest,” Ziegemueller added. “He didn’t blow it on Ferraris — he just lost it.”
Kim, who is now barred from working in finance, is currently working at Home Depot and is pursuing a degree in computer science at Arizona State University.
Wood granted Ziegelmueller’s request to allow Kim to report to prison on May 1 so he may complete his first year at Arizona State.