Bogus Crypto Exchange CEO Jailed for 25 Years

Source: Rémi Cormier (CC BY-SA 3.0)

The CEO of a fake South Korean cryptocurrency exchange that defrauded some 50,000 customers out of a total of $2.3 billion will spend the next 25 years behind bars after the Supreme Court finds him guilty of fraud.

Yonhap said the Supreme Court rejected an appeal by the CEO of exchange V Global, surnamed Lee, and upheld the high court’s guilty verdict.

Though the “exchange” was designed to look every bit like a bona fide trading platform — replete with a website that featured real-time coin tickers — the court learned it was anything but.

Lee created V Global. But the court heard that it had previously used crypto-themed multi-level marketing tactics to deceive investors in another now-defunct exchange.

The V Global exchange used a “multi-level membership system”. It has promised payouts to members in platform tokens for recruiting new members. These coins also later turned out to be fake.

V Global headquarters in Seoul, South Korea. (Source: MBC/YouTube)

The platform operated between July 2020 and April 2021, the court said.

V Global promised 300% growth on initial client shares. But the police finally stepped in after groups of angry investors came forward in 2021, complaining they couldn’t withdraw tokens or fiat from the platform.

CEO to serve 25 years while more fake cryptocurrency executives await final verdict

Lee and a number of top V Global executives went on trial last year. Senior executives were jailed for between four and 14 years, with the company’s second most powerful executive (after Lee) sentenced to eight years in late 2022.

Most of the executives, other than Lee, went on trial together.

In Lee’s first trial (District Court), the CEO was sentenced to 22 years in prison, although prosecutors and victims’ groups had pushed for the maximum life sentence.

The case was then reviewed by the high court, which increased Lee’s sentence to 25 years and ordered him to pay a fine worth more than $8 million.

The Supreme Court – the highest in the country – upheld the high court’s verdict on January 13, confirming that the high court had interpreted the law correctly.

The court heard evidence that Lee had used “sophisticated” “pyramid scheme” methods to ensure that older “members” of the exchange were paid with money provided by new “recruits”.

The high court is currently hearing the cases of the remaining V Global executives. The group was found guilty of “destroying evidence” and “interfering with police investigations” – in addition to fraud-related violations.

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