Fake Good News Pumped Memecoin 1,000-Fold; Rug Pull Ring Faces Up to Four Years in Prison

[Financial News] A crypto fraud ring that was put on trial for issuing a memecoin, spreading false positive rumors to drive up its price, and pocketing about 400 million won in illicit gains was sentenced to up to four years in prison at first instance.
The 11th Criminal Division of the Seoul Southern District Court, presided over by Judge Jang Chan, sentenced a man identified as Park to four years in prison on the afternoon of the 23rd for violating the Act on the Protection of Virtual Asset Users and other charges. Another defendant, identified as Lee, received two years and six months in prison, while a third accomplice, also identified as Lee, was given a three-year prison term suspended for five years.
The court also ordered Park to forfeit about 220 million won, while the two Lee defendants were each ordered to forfeit about 45 million won and 75 million won, respectively.
The court found all of the charges against the defendants guilty. It said, "This is a serious crime that undermines the fair price formation function of the virtual asset market and damages ordinary investors' trust in the market." It added, "By trading based on the appearance they artificially created, the defendants caused unpredictable losses to an unspecified number of investors, making the offense highly blameworthy."
The court said in mitigation that the defendants admitted all of the charges and showed remorse, and that none had a prior record of being punished for similar crimes. In particular, for the Lee defendant who received a suspended sentence, the court considered the fact that he voluntarily submitted cash and virtual assets obtained through the crime to investigators.
The defendants were indicted for issuing coins on the memecoin launch platform Pump.fun from Jan. 31 to Feb. 2 last year, buying them in advance, posting favorable but false information on their official social networking service accounts to lure investors into buying, and then selling all of their holdings once the price rose, reaping about 400 million won in illicit gains.
The price of the coins they issued rose by about 1,000 times in 26 hours, and investigators found that 256 of roughly 6,000 investors suffered losses worth 900 million won. By contrast, the group is believed to have used only 10 million won in criminal funds.
Park, in particular, was accused of working as a crypto influencer and recommending coin purchases as if he were an unrelated third party. The Lee defendant who received a prison term was charged with managing the official social networking service account, manipulating follower counts, and posting false favorable announcements. The other Lee defendant, who received a suspended sentence, was indicted for dispersing the coins across multiple wallets and engaging in circular trading to conceal the fact that the issuing group controlled the coins.
At the closing hearing on the 30th of last month, prosecutors had sought four years and six months in prison for Park, along with a forfeiture order of 248,087,740 won. For the Lee defendant who was indicted with him, they requested three years in prison and a forfeiture of 50,373,805 won. For the other Lee defendant, they asked for a two-year prison term suspended for three years and a forfeiture of 75,062,937 won.
This is the first case in which fraudulent unfair trading provisions have been applied to a rug pull case and brought to trial after the Act on the Protection of Virtual Asset Users took effect. A rug pull refers to a practice in which the operator of a virtual asset project issues and promotes a coin to attract investors' money, then suddenly sells off the holdings to realize profits.

[email protected] Park Sung-hyun Reporter