Trio Jailed for $416K Crypto Fraud by South Korean Court

A South Korean court has sentenced three individuals for orchestrating a crypto investment scam that defrauded investors of approximately 610 million Korean won ($416,000).

The Busan District Court’s Criminal Division 6 found them guilty of violating the Act on the Aggravated Punishment of Specific Economic Crimes.

Operating from a building in Busan in June 2019, the fraudsters lured investors with promises of 30% monthly returns, claiming to use a proprietary algorithm to trade 1,000 high-quality cryptocurrencies.

In reality, no such algorithm existed, and they diverted investor funds for personal use.

The ringleader received a four-and-a-half-year prison sentence, while his two accomplices were sentenced to three and a half years and two years and six months, respectively.

In delivering the verdict, the presiding judge condemned their exploitation of public enthusiasm for cryptocurrency, emphasizing that such deception undermines trust in the financial system and warrants strict penalties.

The case highlights South Korea’s increasing crackdown on crypto-related fraud.

Authorities have introduced stricter regulations to protect investors and maintain market integrity.

Legal experts say this ruling serves as a stern warning to potential offenders that crypto fraud will be met with severe consequences.

Crypto Boom in South Korea Leads to Stronger Fraud Regulations

Recent data submitted to Rep. Cha Gyu-geun of the Rebuilding Korea Party reveals that South Korea's cryptocurrency investor base reached 16.29 million in February—nearly 32% of the country's population.

The figure, sourced from accounts at the nation’s top five domestic exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax), reflects steady growth throughout 2024.

Crypto adoption first surpassed 14 million in March 2024, with an additional 500,000 investors entering the market following Donald Trump’s US presidential victory in November.

Meanwhile, a government report shows that 20% of South Korean public officials who filed asset declarations hold cryptocurrency, with 411 out of 2,047 disclosing direct investments.

As crypto-related crimes grow more sophisticated and international in scope, South Korean authorities are ramping up enforcement.

In March, the Seoul Southern District Prosecutors’ Office formally launched the Joint Investigation Unit (JIU) for Virtual Asset Crimes.

Originally established as a temporary task force in 2023, the unit now has 35 full-time members, including prosecutors and financial regulators from the Financial Services Commission and the Financial Supervisory Service.

Led by Chief Prosecutor Park and two deputy chief prosecutors, the JIU aims to combat the rising tide of crypto fraud and ensure market integrity.