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Virtual Asset Fraud Group Sentenced to Prison for Defrauding Over 1 Billion Won Through False Advertising

Uk Jin
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  • The virtual asset fraud group was sentenced to prison for defrauding 1 billion won through false advertising.
  • They lured investments by promising a monthly 30% profit, but the price of the promised virtual asset plummeted.
  • The court recognized that the defendants did not keep their promise to return the investment and committed fraud with coins of no economic value.
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A group that deceived investors by claiming they could earn several times the profit by issuing and listing virtual assets (cryptocurrency) and defrauded them of 1 billion won has been sentenced to prison.

According to the industry on the 25th, the Busan District Court Criminal Division 6 (Chief Judge Kim Yong-kyun) sentenced Company CEO A, and internal directors B and C, who were indicted on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud), to 4 years and 6 months, 3 years and 6 months, and 2 years and 6 months in prison, respectively.

According to the court, the group set up an office in Busan around May 2019 and advertised that they would select and trade over 1,000 top-quality coins worldwide, guaranteeing a monthly profit of 30% without any loss, to attract investors.

Two victims, deceived by them, invested 109.7 million won and 54.85 million won, respectively.

Not stopping there, the group further enticed investments by claiming that if they invested in the virtual assets they developed, the price would more than double after listing, and they could receive and sell interest coins equivalent to 1.3% of the investment amount daily.

The two victims, once again deceived by their words, transferred much larger sums of 570 million won and 240 million won to them.

The coin promised by A was actually listed on two domestic exchanges in August and October 2019, with an initial price of 4 to 5 won per unit. However, the price plummeted due to a subsequent market decline. A's company failed to consistently pay management fees and marketing costs to the exchanges, leading to delisting in December of that year.

The victims suffered significant losses in this situation.

In court, A and others denied the charges, stating, "We did not deceive investors by explaining the risk of principal loss in advance."

However, the court stated, "The defendants issued a memorandum promising to return the entire investment but did not fulfill it, and the listed coin had no economic value or substance, fully acknowledging the fraudulent act," adding, "The crime is serious as they defrauded a large sum by deceiving the victims," and "It is questionable whether they are sincerely reflecting on their actions."

Unlike A and B, the court did not detain C in court to give him a chance to recover the damages.

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