Prosecutors Indict First Case Under Virtual Asset User Protection Act… "Illicit Gains of 7.1 Billion KRW"

Market Manipulator Gains 7.1 Billion KRW Illicitly

First Indictment Since Law Enactment Last July

Prosecutors have detained and brought to trial an individual who manipulated cryptocurrency prices to gain 7.1 billion KRW. This marks the first indictment under the Virtual Asset User Protection Act.

On the 3rd, the Seoul Southern District Prosecutors' Office's Joint Investigation Team on Virtual Asset Crimes (led by Park Geon-wook) announced the arrest and indictment of Lee Mo (33), a representative of a cryptocurrency management firm, and former employee Kang Mo (28) on charges of violating the Virtual Asset Act. They are accused of placing orders to manipulate the price of A-Coin from July 22 to October 25 last year, securing illicit gains of 7.1 billion KRW.

According to the prosecution, Lee signed a consignment sales contract for 2.01 million A-Coins with the A-Coin issuing foundation through Broker B. B requested Lee to raise the price of A-Coin, and they agreed to split 45% of the sales proceeds.

Lee and Kang are suspected of artificially increasing trading volume to make A-Coin appear prosperous. They repeatedly placed buy and sell orders at market price for A-Coin. According to the prosecution, the average daily trading volume of A-Coin was only about 160,000 from July 1 to 21 last year, but it surged to about 2.45 million on the 22nd when the manipulation began.

There were also indications of using automated order programs to fake trading volume. They placed buy orders at 3-11% or 5-25% lower than the last executed price according to A-Coin's price fluctuations, canceled them, and then placed buy orders again. The prosecution believes this created the illusion of a massive influx of buying pressure, even though no actual trades occurred.

In October-November last year, the prosecution searched the residences of Lee and others and obtained arrest warrants for Lee and Kang in December of the same year. Broker B, who is abroad, has been issued an arrest warrant and is under indictment suspension. The prosecution has seized and preserved Lee's apartment lease deposit in Gangnam-gu, Seoul, worth about 3.3 billion KRW, and approximately 3.5 billion KRW worth of A-Coin.

The Virtual Asset User Protection Act, which was first enacted in July last year, explicitly sanctions unfair trading activities such as virtual asset price manipulation and insider trading. A prosecution official stated, "We will thoroughly investigate and severely punish unfair trading activities in line with the enforcement of the Virtual Asset User Protection Act."

Park Si-on, reporter ushire908@hankyung.com