Asset manager CEO jailed for making 7.1 billion won through crypto price manipulation… the first conviction for violating the Virtual Asset User Protection Act

The head of a crypto asset-management firm who stood trial on charges of manipulating virtual-asset prices to reap illicit gains of around 7 billion won was sentenced to prison.

The 14th Criminal Division of the Seoul Southern District Court (Presiding Judge Lee Jeong-hee) on the 4th sentenced Mr. Lee, the CEO of Company A, who was indicted in custody for violating the Virtual Asset User Protection Act, to three years in prison, a 500 million won fine, and forfeiture of about 846 million won.

However, the court said it would not revoke his bail (release subject to conditions such as posting a bond) in light of his diligent participation in the proceedings and the fact that he had been tried while in custody, and therefore did not take him into custody in the courtroom.

The court said, “This is a serious crime that obstructs the virtual-asset market’s fair price-discovery function and undermines investors’ trust,” adding, “It also carries a high degree of blameworthiness because it creates unforeseeable risks for an unspecified number of investors.”

Referring to Mr. Lee’s continued denial of the charges, the court said, “He has not recognized the gravity of the crime and has shown no remorse, so strict punishment is necessary,” and pointed out that he “planned and led the offense and carried it out in a deliberate and brazen manner.”

Mr. Kang, a former employee of the firm who was also indicted in custody on the same charges, was sentenced to two years in prison, suspended for three years.

Prosecutors had alleged that from July 22 to Oct. 25, 2024, the two used an automated trading program to inflate trading volume and repeatedly submit bogus buy orders, manipulating prices and securing illicit gains of about 7.1 billion won.

The coin’s average daily trading volume was about 160,000 tokens as of July 21, 2024, before the offense, but surged to 2.45 million tokens the next day when the scheme began. Of that, 89% was found to have been traded by Mr. Lee.

The court found Mr. Lee and others guilty of colluding to manipulate the coin’s price and obtain illicit gains. However, it ruled not guilty due to insufficient evidence on the prosecution’s part regarding the alleged illicit-gain amount of about 7.1 billion won.

The case is the first alleged violation of the Virtual Asset User Protection Act to be fast-tracked (emergency measure) to prosecutors by the Financial Supervisory Service since the law took effect in July 2024.

Ko Jeong-sam, Hankyung.com reporter jsk@hankyung.com