Korean Court Jails Crypto CEO for Token Price Manipulation

A court in South Korea has just sentenced the head of a local digital asset management firm to 3years in prison for market manipulation. This is the first time someone has been convicted under South Korea’s new crypto law. 

This ruling signals tighter enforcement as regulators move to crack down on illicit crypto-related activities to restore trust to the fast-growing crypto market.

Crypto CEO Punished for Price Manipulation

On February 4, the Seoul Southern District Court said Lee broke the Virtual Asset User Protection Act by using unfair trading methods to make money. Investigators revealed that between July 22 and October 25, 2024, Lee used an automated trading program to control the market activity of the ACE token. 

He placed repeated wash trades and artificial buy and sell orders to create the false appearance of high demand and rising interest. Before the scheme began, the token recorded an average daily trading volume of about 160,000 units. 

One day after Lee activated the program, trading volume jumped sharply to around 2.45 million units. Authorities found that Lee alone controlled nearly 89% of all trades during that period, showing clear and intentional manipulation.

The court ordered him to pay a fine of 500 million Korean won. He must also give up about 846 million won earned from the crime. However, the judges chose not to detain Lee immediately in court, pointing to his cooperative attitude and good conduct during the trial.

Court Emphasizes Market Fairness and Investor Trust

The court described the convict’s actions as a serious offense that damaged fair price formation in the crypto market and weakened investor confidence. The judges said Lee did not understand how serious his actions were. They also said he showed no clear regret, so a strong sentence was needed.

Min Cheol Kang, a former employee of the same firm who worked with Lee, also received punishment. The court sentenced him to two years in prison but suspended the sentence, placing him on probation for three years.

The court confirmed that the defendants worked together to manipulate the token price for unfair gains. However, it did not fully accept the prosecution’s claim regarding the total profit amount. 

A Turning Point for Crypto Regulation in South Korea

This case holds special importance because it represents the first conviction under the Virtual Asset User Protection Act, which came into force in 2024. The ruling sets a clear precedent and sends a strong warning to market participants who attempt to exploit digital assets for unfair profits.

At the same time, South Korean lawmakers continue to shape the future of crypto regulation. They are preparing new legislation known as the Digital Asset Basic Act, which aims to define clearer rules for the industry. 

The proposed law is expected to address areas such as stablecoins, initial coin offerings, and broader market conduct.