[Exclusive] Southern District Prosecutors' Office Issues Consecutive No-Charge Decisions on Lime Case Just Before Han Dong-hoon's Inauguration

Daishin Securities·Former Center Chief Jang Mo
Non-Prosecution Due to Insufficient Evidence on the 11th
Management Also Non-Prosecuted on the 15th
Amid Allegations of "Blocking Joint Investigation Unit's Probe"
Accuser's Side Reviews Request for Reconsideration

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] The Seoul Southern District Prosecutors' Office, which is investigating the Lime Asset Management redemption suspension fraud case, has recently confirmed that it has dismissed two related complaints without indictment (no charges).

According to a comprehensive report by Asia Economy on the 20th, the investigation team at the Seoul Southern District Prosecutors' Office dismissed the case against Daishin Securities and Jang, former head of Daishin Securities Banpo WM Center, who were accused of violating the Electronic Financial Transactions Act, on the 11th due to insufficient evidence. This case was previously ordered for reinvestigation by the Seoul High Prosecutors' Office in August last year after the complainant filed an appeal. Victims who joined the Lime Fund through Daishin Securities filed a lawsuit in 2020 against Daishin Securities and Center Director Jang, claiming that Daishin Securities arbitrarily manipulated the computer system without the consent of the fund subscribers to cancel redemption requests. Subsequently, on the 15th, the management including Yang Hong-seok, president of Daishin Securities, who was accused of the same matter, was also dismissed without indictment. A representative from the Southern District Prosecutors' Office told this publication, "There have been cases recently dismissed without charges related to the Lime case."

In the legal community, there are suspicions regarding the background of the swift closure of the cases. The timing of the dismissal of the two cases within four days was right after the confirmation hearing of Minister of Justice Han Dong-hoon (on the 9th) and just before his inauguration. There are also suspicions that "Minister Han prevented the Joint Financial and Securities Crime Investigation Unit (Joint Investigation Unit), which he pledged to reestablish after taking office, from conducting investigations." Minister Han ordered the establishment of the Joint Investigation Unit at the Southern District Prosecutors' Office as his first directive the day after his inauguration on the 17th, and the unit was promptly relaunched with 48 members.

The Lime fraud case is one of the major cases expected to be actively reinvestigated by the Southern District Prosecutors' Office with the relaunch of the Joint Investigation Unit. However, it is uncertain how the two dismissed complaints will be handled. According to the amended Prosecutors' Office Act and Criminal Procedure Act, which will take effect on September 10, the prosecution will have direct investigative authority only over corruption and economic crimes. Direct investigation of the Lime fraud case is also possible. However, this direct investigative authority is temporary, so if investigations begin, they are likely to proceed swiftly.

The complainants are considering whether to file a request for review with the court regarding the cases dismissed without charges by the Southern District Prosecutors' Office. They want the court to correct the prosecution's unfair decisions through a ruling. If the court accepts the complainants' objections, reinvestigation may be possible. Jung Gu-jip, co-representative of the Daishin Securities Lime Fraud Victims Countermeasures Committee, said, "So far, investigations have focused on Lime Asset Management, and there has been insufficient attention to the sellers such as Daishin Securities, Shinhan Financial Investment, and KB Securities," adding, "I hope the Joint Investigation Unit will reveal the hidden figures and points of suspicion by tracing the funds through the sellers' accounts."

The Southern District Prosecutors' Office is reportedly reviewing an investigation into Kwon Do-hyung, CEO of Terraform Labs, the issuer of the cryptocurrency Luna and TerraUSD (UST), who was reported by victims of the recent crash. The case is expected to be assigned soon and is likely to be the first case handled by the relaunched Joint Investigation Unit. Investors who suffered losses from the collapse of Luna and TerraUSD (UST) have filed complaints with the Southern District Prosecutors' Office accusing CEO Kwon and Terraform Labs of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission. Luna and UST lost approximately $45 billion (about 57.78 trillion KRW) in total value within a week, causing prices to plummet, and it is estimated that 200,000 domestic investors suffered losses. Some have pointed out that the unique algorithm adopted by Terraform Labs was essentially a 'Ponzi scheme' (multi-level financial fraud).