The U.S. Commodity Futures Trading Commission (CFTC) has jailed a bitcoin trader and fined him over $1 million for running a fraudulent bitcoin and litecoin scheme.

According to a press release issued Friday by the CFTC, the trader, Arizona resident Joseph Kim, admitted to defrauding investors of hundreds of thousands of dollars after misappropriating more than $600,000 of his previous employer’s funds.

Between September and November 2017, Kim transferred bitcoin and litecoin from his employer, a Chicago-based trading firm, to his own personal accounts, causing the firm losses of $601,000, according to the release.

When the firm questioned Kim about missing tokens, he falsely stated that security issues with the crypto exchange required transfers into other accounts. Upon discovering Kim’s theft in November of that year, the firm immediately fired him.

But Kim didn’t stop there. He then started soliciting funds from individual customers, apparently to continue trading in crypto with the hope of making profits to repay his ex-employer. As a result, he fraudulently obtained approximately $545,000 from at least five customers between December and March 2018.

Kim reportedly lied to customers that he had voluntarily left his employer to start his own trading company. He also falsley claimed he would invest funds in a low-risk arbitrage strategy, when in fact, he made high-risk trades with the cryptocurrency and lost all $545,000 of his customers’ funds.

In addition to a fine of $1,146,000, the CFTC has also permanently banned Kim from trading, including in cryptocurrencies, and sentenced him to 15 months in jail, according to the release.

James McDonald, director of enforcement at the CFTC, said:

“Today’s Order stands as yet another in the string of cases showing the CFTC’s commitment to actively police the virtual currency markets and protect the public interest.

Bitcoin and gavel image via Shutterstock