A South Korean court has sentenced Jong-hwan Lee, CEO of a local crypto asset management firm, to three years in prison for manipulating cryptocurrency prices to secure illicit profits. The ruling, issued by the Seoul Southern District Court, marks the first enforcement case under South Korea’s Virtual Asset User Protection Act, which took effect in July 2024. Judges found that Lee used automated trading programs and repeated wash trades to artificially inflate the trading activity of the ACE token between July and October 2024, generating roughly 7.1 billion won (about $4.88 million) in unfair gains. In addition to the prison term, the court imposed a 500 million won fine and ordered the forfeiture of hundreds of millions of won in criminal proceeds, though Lee was not detained in court due to his cooperative behavior during the trial.
A former employee involved in the scheme received a two-year prison sentence suspended for three years. While the court confirmed market manipulation, it partially dismissed claims regarding the exact profit amount due to insufficient evidence.
In a separate development, South Korean prosecutors are also investigating the disappearance of a significant amount of confiscated Bitcoin discovered during an internal audit at the Gwangju District Prosecutors’ Office. Local media estimate the missing assets could be worth around 70 billion won (approximately $47.7 million). Early findings suggest the loss may be linked to a phishing incident that exposed wallet credentials, underscoring operational and security risks authorities face when managing seized digital assets.