Asset management firm CEO gets 3-year prison term for coin price manipulation...first case under virtual asset law

[Financial News] The head of a coin asset management firm, who was indicted for inflating virtual asset (coin) prices using an automated trading program and obtaining about 7.1 billion won in illicit gains, has been sentenced to prison in the first trial.
On the afternoon of the 4th, Criminal Division 14 of the Seoul Southern District Court, presided over by Judge Lee Jeong-hee, sentenced Mr. Lee (35), the head of the coin firm indicted for violating the Act on the Protection of Virtual Asset Users, to three years in prison, a fine of 500 million won, and forfeiture of 846,563,000 won. However, the court did not take him into custody in the courtroom, noting that he had appeared faithfully for trial, had already spent a period in detention, and is currently out on bail.
Explaining the reasons for the sentence, the court stated, "This is a serious crime that undermines the fair price formation function of the virtual asset market and gravely damages the trust of ordinary investors, so the nature of the offense is poor." The judges added, "It created a risk of causing unforeseeable losses to an unspecified number of general investors, which makes the conduct highly blameworthy."
The court went on to say, "He has not recognized the seriousness of his crimes or shown remorse, so a stern punishment is necessary." It further held, "Even though he was aware of the potential illegality under the law in force, he brazenly carried out the scheme, and the method used was particularly egregious."
His accomplice, Mr. Kang (30), who was tried alongside him, was sentenced to two years in prison, suspended for three years. Kang had denied the charges, claiming he merely carried out mechanical tasks under Lee’s instructions, but the court found that "he continued to participate even though he understood the structure and purpose of the scheme."
However, the court rejected part of the indictment in which prosecutors alleged that the defendants made net sales of about 1.22 million coins and obtained roughly 7.1 billion won in illicit gains. The judges explained that, based on the evidence submitted, it was difficult to objectively determine the execution price for each order, the trading fees, and the acquisition cost of the coins, making it impossible to conclusively fix the exact amount of unjust profits.
From July 22 to October 25, 2024, they allegedly used an automated trading program to sharply increase the trading volume of a particular coin and submitted large numbers of fake buy orders. By creating the appearance of strong buying interest, they manipulated the price and then took illicit profits, leading to their indictment.
Investigators found that they had signed a contract to sell 2.01 million coins supplied by an overseas coin-issuing foundation on consignment through a domestic exchange, arranged by a broker. Prosecutors concluded that they conspired so that 55% of the profits would go to the issuing foundation, while the remaining 45% would be split equally between Lee and the broker.
In addition, the coin they traded had an average daily trading volume of about 160,000 units before the scheme began, but once it started, that figure surged to 2.45 million, roughly a 15-fold increase. Of that volume, about 89% was found to be attributable to Lee’s trades.
At the final hearing held last November, prosecutors had asked the court to sentence Lee to 10 years in prison and a fine of about 23 billion won, and to impose a six-year prison term on Kang.
This case is the first one that prosecutors received from the Financial Supervisory Service (FSS) through a fast-track (expedited investigation) procedure after the Act on the Protection of Virtual Asset Users took effect in July 2024 and sanctions on unfair coin trading began to be enforced.
psh@fnnews.com Park Sung-hyun Reporter