Operator of Virtual Asset Site Sentenced for Defrauding Investors 400 Times and Embezzling 200 Million Won

[Financial News] A man in his 50s who operated a virtual asset investment site and embezzled hundreds of millions of won by falsely promising high returns has been sentenced to prison.
According to the legal community on the 18th, the Seoul Western District Court Criminal Division 6 (Judge Kim Jinseong) sentenced Mr. A (59) to one year in prison on charges of fraud. He was also ordered to compensate the applicant for damages with 79 million won.
Mr. A was brought to trial on charges of receiving investment funds from victims despite lacking the capital or ability to conduct a virtual asset investment business.
According to the court, Mr. A set up an office in Gangnam-gu, Seoul, in November 2020 and launched a virtual asset investment site. He gathered investors, held briefings, and spread false information through a messenger group chat, claiming that "investing in a specific coin would yield a 20-30% profit."
However, Mr. A did not have a stable business foundation or capital from the start. Apart from initial costs such as office rent, he had no other funds and planned to operate only by using new investors' funds to pay returns to existing investors in a Ponzi scheme. Despite the unsustainable structure without new investors, he falsely promised high returns without principal loss.
Mr. B was deceived by Mr. A and transferred a total of 48.15 million won to Mr. A's account 105 times over a month in December 2020. Another victim, Mr. C, transferred a total of 181.9 million won or transferred it to a third-party account 299 times from the 15th to the 28th of the same month. Most of the funds were used for Mr. A's personal purposes.
Even after the site was closed, the crime continued. Mr. A opened a second site in January 2021 and committed another investment fraud, claiming, "I will recover the existing damage."
Mr. C was again deceived by this statement and transmitted 28,662 virtual assets 13 times over a month from January 2021. However, Mr. A had no intention or ability to recover the damage from the start and again exhausted the funds in a Ponzi scheme.
The court explained the sentencing reasons, stating, "The defendant's acknowledgment of the crime and lack of prior convictions are favorable factors. The victims also bear some responsibility for the occurrence or expansion of the damage," but "although the defendant made some returns or deposits, most of the damage has not been recovered."

425_sama@fnnews.com Choi Seunghan Reporter