South Korean Court Slaps Crypto CEO Lee Jong-hwan with 3-Year Sentence for Price Manipulation
Another crypto exec gets cuffed. This time, a South Korean court throws the book at a CEO for rigging the game.
The Gavel Drops
Forget moonshots—this is about jail time. The verdict is in, and it's a stark reminder that old-school market rules apply, even in the new digital frontier. The sentence sends a clear signal: manipulate, and you will face the consequences.
Playing with Fire
The scheme was classic pump-and-dump, just dressed in crypto's flashy clothes. The court found the executive guilty of artificially inflating token prices, a move that ultimately burns retail investors while the architects cash out. It's a tired playbook that regulators globally are finally starting to read.
The Regulatory Lens Tightens
This isn't an isolated incident. Watchdogs from Seoul to Washington are sharpening their claws. The sentence reinforces a growing trend of enforcement, pushing the industry toward the maturity—and scrutiny—it desperately needs to gain mainstream trust. Consider it a costly lesson in compliance.
The Bottom Line
While the sentence cleanses one wound, the broader market shrugs—proving once again that for every bad actor removed, the relentless engine of innovation churns on. The takeaway? The path to legitimacy is paved with both groundbreaking tech and the occasional perp walk. Just another day in the volatile, thrilling, and sometimes scandalous world of digital assets.
Court details methods behind ACE coin price manipulation
Hankyung, a local news outlet, reported that the court found that Lee engaged in price manipulation between July 22 and October 25 of last year by repeatedly purchasing and selling “ACE Coin,” which was listed on the virtual asset exchange Bithumb, at noticeably higher or lower prices.
According to the court, it is difficult to anticipate profits even if the price rises in a structure in which high-priced buying and low-priced selling are repeated in very short intervals, and losses are certain to increase if the price falls. The court further noted that it is hard to regard this as a typical investment activity, as there is no rational objective other than increasing trade volume.
The court also observed that Lee frequently filed “dummy buy orders” with a very low likelihood of execution. This suggested a long line of buy orders at the bottom of the order book, creating a buy wall.
Hankyung reported that the court found insufficient evidence for the prosecution’s allegation of 7.1 billion won in illicit gains. According to the report, this resulted from the prosecution’s failure to precisely ascertain the transaction amounts and commissions for hit buys and sells, as well as the inclusion of transactions not included in the indictment in the data used to calculate ill-gotten earnings.
The court stated, “The Virtual Asset User Protection Act considers profits obtained through violations as a component of criminal penalties, and therefore the value must be calculated strictly and carefully.”
As a result, the defendant received a sentence that was less severe than what the prosecution had requested (10 and 6 years in jail, respectively).
South Korea strengthens oversight on crypto market manipulation
This ruling marks the first conviction under the new Virtual Asset User Protection Act, which took effect in July 2024. The court revealed, “To the best of my knowledge, this is likely the first case to result in a verdict under this Act.”
The court further stated that the defendants’ actions constitute a severe felony that seriously erodes users’ confidence in the virtual asset market and compromises its fair price formation function.
Legal experts say the ruling also sheds light on how manipulation schemes operate in illiquid markets. Attorney Lee Bo-hyun of Hwawoo Law Firm stated that this ruling demonstrates that price manipulation occurs when an asset’s trading volume is intentionally increased to create buying pressure on virtual asset exchanges that lack institutional investors (LPs).
Notably, under the Virtual Asset User Protection Act, those who engage in unfair trading practices may be subject to criminal penalties, such as a minimum one-year jail sentence or a fine equal to three to five times the amount of illicit proceeds. It is also possible to be fined up to 4 billion won, which is twice the amount of ill-gotten gains.
According to the South Korea Financial Services Commission (FSC), the Act also gives the FSC the power to investigate and take appropriate action regarding unfair trading practices, as well as to supervise and inspect VASPs. The Financial Supervisory Service will be responsible for inspecting VASPs.
Investigating individuals suspected of participating in or being involved in unfair trading operations shall fall within the purview of the FSC and the FSS. The FSC has the authority to refer the case to the Prosecutors’ Office, order business suspension, or take corrective measures when an Act violation is discovered.
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