The CEO of a South Korean cryptocurrency company has been sentenced to three years in prison

Background of the allegations

A South Korean court has sentenced the CEO of a medium-sized cryptocurrency exchange to three years in prison for orchestrating market manipulation schemes involving various tokens between 2021 and 2023.

• Estimated illicit profits: 28–34 billion won ( approximately 20–25 million USD )

• Victims: Primarily individual investors in South Korea; approximately 12,000–15,000 accounts were affected.

• The penalty: 3 years imprisonment + a fine of 15 billion won (approximately US$11 million) + a 5-year ban from participating in financial services.

The sentence, handed down by the Seoul Central District Court on February 3, 2026, and reported by Yonhap News Agency, Chosun Ilbo, and local financial media outlets, marks one of the harshest criminal penalties ever imposed on a cryptocurrency executive in South Korea under the Virtual Asset User Protection Act (effective from 2024).

Court ruling

Although the identities and specific assets were not made public, the court reportedly concluded that the management orchestrated manipulative trading practices to distort prices and mislead investors. Such practices typically include coordinated trading, money laundering, or the creation of fictitious trading volumes—tactics that undermine the process of determining fair prices.

The verdict reflects the court's acknowledgment that deliberate market manipulation causes real economic damage, particularly in markets dominated by small retail investors.

A three-year prison sentence far exceeds the fines or suspended sentences often seen in some previous cryptocurrency cases. It establishes a clear deterrent: governance accountability is no longer theoretical. For founders and senior managers, failures in governance and manipulative behavior can directly lead to personal criminal liability.

Legal and enforcement context

This case is part of South Korea's robust crackdown on cryptocurrency-related crime following the 2024 Virtual Asset User Protection Act and ongoing discussions on the Digital Asset Basic Law.

• FSS's upgraded AI monitoring system (CryptoWatch AI 2.0) detected suspicious patterns in late 2024.

• The prosecution is being led by the Seoul Southern District Prosecutors' Office ( the unit specializing in cryptocurrency crimes).

• Parallel civil lawsuits: 80 billion won (US$58 million) in compensation filed by victims.

• A broader wave: 47 official investigations and 12 account freezes in the past 6 months under a new AI monitoring system.

The ruling sends a strong message that South Korea will treat large-scale cryptocurrency manipulation cases with the same seriousness as traditional securities fraud.

Assessment and Conclusion

The three-year prison sentence for the former cryptocurrency CEO is not an isolated incident — it's the clearest signal yet that South Korea views large-scale market manipulation as equivalent to traditional securities fraud. With its AI-powered real-time monitoring system and rigorously enforced criminal penalties, the nation is rapidly transforming from a “cryptowestern” into one of the most tightly regulated major markets.

For participants in the global cryptocurrency market, this further reinforces the notion that Asia's second-largest economy (in terms of cryptocurrency adoption) is no longer a legal gray area. Compliance is mandatory — and enforcement is real.

Disclaimer: The information presented in this article is the author's personal opinion in the field of cryptocurrency. This is not financial or investment advice. All investment decisions should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in this article do not represent the official stance of the platform. We recommend that readers conduct their own research and consult with experts before making any investment decisions.

Compiled and analyzed by HCCVenture

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