[Reporter’s Notebook] US 'King of Coins' Faces 115 Years... South Korea's Punishment Remains Lenient

"The 'King of Coins' who fell into disgrace as a fraudster could face up to 115 years in prison."

When Sam Bankman-Fried, who caused the FTX bankruptcy crisis known as the 'Coin Market Lehman Brothers Incident,' was found guilty last week in a U.S. court, foreign media outlets rushed to report this. He founded the world's third-largest cryptocurrency exchange but caused numerous problems, resulting in enormous losses for investors. The U.S. jury delivered guilty verdicts on all seven charges, including fraud, money laundering, and illegal campaign contributions.

How severe will his sentence be at the sentencing hearing scheduled for March 28 next year? U.S. CNBC predicted that if the maximum sentences are imposed for each individual charge, the total sentence would easily exceed 100 years. The New York prosecutors are currently investigating Bankman-Fried for bribery and violations of campaign finance laws, which could increase his sentence further. The U.S. judiciary is strict and resolute in punishing financial fraud in this manner.

The atmosphere is very different from that in South Korea. In South Korea, when a person commits multiple crimes, the punishment is based on the heaviest sentence for the most serious crime, with some additional penalties for other offenses. Compared to the U.S., where sentences are determined for each individual crime and combined to result in prison terms exceeding 100 years, South Korea’s approach is often criticized as a 'light slap on the wrist.'

The sentence received by Kim Bong-hyun, the main culprit in the Lime Fund scandal, which is called the largest financial fraud case since the founding of Korea, was 30 years. Since then, in April this year, there was the SG Securities stock price crash, in June allegations of manipulation by leading chat rooms, the five stocks hitting the lower price limit, and just last week the sharp drop in Youngpoong Paper’s stock price. Stock manipulation incidents have been occurring one after another in the domestic capital market. Because the punishment for white-collar crimes is relatively light, it is difficult to refute the criticism that financial crimes are rampant.

The public outcry that Kwon Do-hyung, CEO of Terraform Labs, who is responsible for the Terra-Luna crash and is estimated to have caused losses exceeding 50 trillion won to investors, should be punished in the U.S. rather than Korea, is also coming from the same context, as he is being pursued by both Korean and U.S. judicial authorities.

Financial fraud, especially Ponzi schemes (multi-level financial fraud), must be severely punished because the victims are individual small investors rather than institutions. If light punishments continue, second and third cases of stock manipulation, Lime, and Terra-Luna incidents will inevitably be repeated.