Dongin Secures Acquittal on Appeal, Overturning Five-Year Prison Sentence in ‘Virtual Asset Sales Fraud’ Case [Law Firm News]

[Financial News] Dongin Law Group represented a defendant who was sentenced at trial to five years in prison for fraud and concealing criminal proceeds in connection with the sale of virtual assets. On appeal, the firm overturned the lower court’s ruling and secured an acquittal.
According to legal sources on the 4th, Criminal Appeals Division 2 of the Seoul Northern District Court acquitted Cho, a man in his 30s, on the 12th of last month. He had been indicted on charges of fraud and violating the Act on the Regulation and Punishment of Criminal Proceeds Concealment.
Prosecutors alleged that Cho conspired with operators of a coin foundation and others to sell virtual assets at prices created through wash trading, then converted the sales proceeds into cash by disguising them as payments for gift-card purchases. The trial court found that Cho had recognized the possibility that the business was fraudulent, convicted him on both charges, and sentenced him to five years in prison.
At the appellate trial, Dongin Law Group, representing Cho, focused on arguing that he merely trusted the operators’ explanations and connected them with a sales agency. The firm maintained that Cho neither knew the business was fraudulent nor conspired to commit the fraud.
Dongin Law Group presented evidence that the virtual asset had actually been listed on an overseas exchange and that a white paper, roadmap, application wallet, metaverse platform development plans, and plans for additional listings existed. The firm argued that the project’s failure to proceed as planned afterward did not, by itself, establish that Cho had known from the time of the sale that the business was fraudulent.
Cho’s conduct after the sales was also presented as key evidence. Through Telegram conversations and witness examinations, the defense demonstrated that Cho continued to check on the construction of a payment system, the signing of memorandums of understanding (MOUs), and progress toward additional listings even after the coin sales. It also showed that he strongly protested to a key operator when the listing was delayed.
After considering these circumstances, the appellate court found it difficult to rule out the possibility that Cho, too, had been deceived by the core operators and became involved in selling the virtual assets. Given that the assets had actually been issued and listed on an overseas exchange, and that the project had the appearance of a legitimate business to some extent, the court concluded that it was difficult to definitively say Cho had conspired in the fraud.
The court also found Cho not guilty of concealing criminal proceeds. It determined that the sales agencies appeared to have received their fees in cash at the request of the operators, and that it was difficult to conclude that Cho was aware of the illegal cash-conversion scheme using gift cards.
Jeong Seok-woo and Jo Jun-ho, the Dongin Law Group attorneys who handled the case, explained, "The significance of this case is that it confirmed that a sales participant cannot be held liable for fraudulent intent or co-principal liability merely because a virtual asset business ultimately failed or its roadmap was not implemented. The defendant’s awareness and role at the time of the alleged crime, the operators’ explanations, the project’s objective appearance, and the defendant’s conduct after the sales must be examined in detail."
They added, "In virtual asset cases, it is necessary to distinguish between the project’s subsequent failure and whether the defendant was aware of the fraud at the time of the sale. This case confirms that merely having been involved in sales is not enough to establish a conspiracy to commit fraud or intent to conceal criminal proceeds."
[email protected] Yoo Seon-jun Reporter