V Global’s $2 Billion Crypto Scam CEO Sentenced to 25 Years in Jail

Lee Byung-gul, the chief executive of failed South Korean cryptocurrency exchange V Global, will serve 25 years in prison after his sentence was upheld by Korea’s Supreme Court on Friday. The court upheld an appeals court ruling against the chief executive for running a pyramid scheme between 2020 and 2021 that defrauded thousands of investors, local media reported.

See related article: Sam Bankman-Fried pleads not guilty to fraud charges in crash of FTX exchange

Fast facts

  • According to Yonhap News Agency, three other unnamed V Global executives had their sentences of between four and 14 years in prison upheld by the Supreme Court on the same day.
  • A spokeswoman for the Supreme Court said the full names of the convicted individuals were redacted in the sentencing documents provided to local authorized media, citing the protection of personal information. Forkast News previously reported Lee’s full name after he was named in the sentencing by a lower court.
  • The trial court had ruled that the criminal proceeds of the pyramid scheme would not be confiscated, citing the difficulty of specifying the exact amount of money accumulated by V Global. The Supreme Court upheld this decision, Newsis reported. The Supreme Court spokeswoman declined to comment on this when she was contacted by Forkast News.
  • V Global defrauded some 50,000 investors out of 2.8 trillion Korean won between July 2020 and April 2021 (now equivalent to $2.26 billion), according to the court ruling reported by local media.
  • V Global has promised a 300% return on investment in its self-issued token V Cash. The exchange required new members to create accounts with a deposit of 6 million won (US$4,860) offering a guaranteed return of 18 million won. The V Cash token became worthless when the exchange shut down in September 2021
  • The exchange also reportedly promised users 1.2 million won in commission if they successfully referred another investor. Some money was returned to users, but those funds were withdrawn from new users’ deposits, the usual method in a pyramid scheme, the court found.
  • In December, seven other V Global executives were convicted of conspiracy in the pyramid scheme and sentenced to three to eight years in a district court, according to local publication The Economist. They are currently appealing the sentence, Yonhap said.
  • V Global’s convictions come as South Korean prosecutors are trying to arrest Terraform Labs Pte. co-founder and South Korean citizen Kwon Do-hyung on charges of fraud and capital markets law violations. Kwon’s Earth-Moon cryptocurrency and stablecoin project collapsed in May of last year, wiping out billions of dollars and setting off a domino chain of bankruptcies across the industry. Do Kwon is said to live in Serbia and has denied the allegations against him.
  • In another case involving the collapse of an exchange, Sam Bankman-Fried, the founder and former CEO of the Bahamas-based trading platform FTX which went bankrupt in November, is facing eight criminal counts including wire fraud and conspiracy to commit money laundering of money. The lawyers said forkast who if convicted, could face decades in prison. Bankman-Fried pleaded not guilty to all charges in a US court.

See related article: Why is Earth-Luna founder Do Kwon harder to arrest than FTX’s Sam Bankman-Fried?

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