South Korea Jails Crypto CEO in First-Ever Case Under New Virtual Asset Law

A South Korean court docket has sentenced Jong-hwan Lee, CEO of an area crypto asset administration agency, to a few years in jail for manipulating cryptocurrency costs to safe illicit earnings.

The Seoul Southern District Court dominated on Wednesday that Lee violated the Virtual Asset User Protection Act, incomes roughly 7.1 billion Korean received (which is value round $4.88 million) by way of worth manipulation.

Court Findings

In addition to the jail time period, the court docket imposed a effective of 500 million received, almost $344,000, and ordered the forfeiture of round 846 million received, or $581,900 in felony proceeds. However, Lee was not taken into custody throughout the court docket proceedings, because the judges cited his good habits all through the trial.

The court docket found that between July 22 and October 25, 2024, Lee employed an automatic buying and selling program to inflate buying and selling volumes and repeatedly place wash trades in the ACE cryptocurrency. Investigators reported that the each day buying and selling quantity of ACE jumped from roughly 160,000 items to 2.45 million items in a single day, and Lee was chargeable for 89% of the exercise.

Min-cheol Kang, a former worker of the agency additionally indicted in the case, obtained a two-year jail sentence with three years of probation. While the court docket confirmed the defendants’ involvement in manipulating ACE for unfair earnings, it partially acquitted them relating to the precise 7.1 billion received determine attributable to inadequate proof.

Interestingly, this case is the primary enforcement underneath South Korea’s Virtual Asset User Protection Act, which got here into impact in July 2024.

South Korea Crypto Mishap

As courts transfer to punish crypto market abuse, different branches of the authorized system are grappling with the dangers tied to dealing with digital property. In January, South Korean prosecutors have been investigating the disappearance of a considerable amount of Bitcoin that had been seized and saved as a part of a felony case.

The situation was found throughout a routine inside inspection on the Gwangju District Prosecutors’ Office, the place officers verify entry particulars for confiscated property, together with credentials saved on detachable units like USB drives. While authorities haven’t confirmed the precise quantity misplaced, native media estimates the lacking Bitcoin could possibly be value round 70 billion received, or roughly $47.7 million.

According to officers cited in native experiences, the loss might have occurred after an company employee accessed a fraudulent web site, which raised suspicion of a phishing assault fairly than a direct breach of presidency programs. It is believed that pockets passwords or entry credentials might have been uncovered, permitting attackers to empty the seized funds.

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