The CEO of a cryptocurrency trading firm was sentenced to three years in prison in the first trial for manipulating virtual currency prices to gain approximately 7 billion won in illegal profits.
The 14th Criminal Division of Seoul Southern District Court (Presiding Judge Lee Jung-hee) on Tuesday sentenced Mr. Lee, CEO of a coin trading company, to three years in prison, a 500 million won fine, and ordered forfeiture of approximately 846 million won for violating the Virtual Asset User Protection Act. However, the court did not take Lee into immediate custody, considering that he had cooperated with the trial proceedings and had already been detained during the trial. Co-defendant Kang received a two-year prison sentence suspended for three years.
The defendants were charged with artificially inflating trading volumes to sell coins received from an overseas cryptocurrency foundation at higher prices on domestic exchanges, gaining approximately 7.1 billion won ($5.2 million) in illegal profits between July 22 and October 25, 2024. The average daily trading volume of the coins they traded was around 160,000 before the scheme on July 21, 2024, but surged to 2.45 million the day after the manipulation began. Lee's transactions accounted for approximately 89 percent of this volume.
"This is a serious crime that disrupted fair price formation in the virtual asset market and damaged investor trust," the court said. "It poses unpredictable risks to an unspecified number of investors, making it highly culpable."
The court noted that Lee had denied the charges throughout the proceedings, stating, "He failed to recognize the severity of his crime and showed no remorse, requiring strict punishment. He planned and led the scheme, committing the crime in a calculated and brazen manner."
While the court found Lee and his co-conspirators guilty of manipulating coin prices and obtaining illegal profits, it ruled that the prosecution's evidence was insufficient to prove the full 7.1 billion won in alleged illegal gains, resulting in a partial acquittal on this amount.
This case is the first that prosecutors received from the Financial Supervisory Service through the fast-track system after sanctions on unfair cryptocurrency trading took effect following the implementation of the Virtual Asset User Protection Act in July 2024.
At the final hearing in November last year, prosecutors had requested a 10-year prison sentence and approximately 23 billion won in fines for Lee, and a six-year prison sentence for Kang.