Prosecution Appeals First Ruling in First-Ever Virtual Asset User Protection Act Case

Appeal Filed Against Ruling That "7.1 Billion Won in Unjust Enrichment Cannot Be Calculated"

The prosecution has appealed a first-instance ruling that found a price-manipulation trader, who was brought to trial on charges of unfairly obtaining approximately 7.1 billion won by manipulating virtual asset prices, could not be ordered to forfeit illicit gains because "the exact amount of unjust enrichment cannot be calculated."

The Joint Investigation Team on Virtual Asset Crimes at the Seoul Southern District Prosecutors' Office (headed by Chief Prosecutor Kim Yongje) announced on the 10th that it had appealed the first-instance ruling on the grounds of misinterpretation of law, misapprehension of facts, and unfair sentencing. The lower court had held that it was impossible to accurately calculate the amount of unjust enrichment obtained by price-manipulation trader A, who was indicted and detained on charges of violating the Virtual Asset User Protection Act, and employee B, and therefore that it could not impose a forfeiture order.

Seoul Southern District Prosecutors' Office, Yangcheon-gu, Seoul. The Asia Business Daily database

On the 4th, the Seoul Southern District Court sentenced A to three years in prison, a fine of 500 million won, and a forfeiture of 846 million won. For accomplice B, the court sentenced him to two years in prison, suspended for three years. The court regarded the approximately 7.144 billion won in unjust enrichment stated in the indictment as an unspecified amount and entered a "not guilty by reason" disposition. This means that, although the court finds the defendant guilty and imposes a sentence in the operative part of the judgment, it records not guilty in the reasoning section if it finds the specific allegation in the indictment to be unproven. In this case, the court found that the prosecution had failed to sufficiently prove the approximately 7.1 billion won in unjust enrichment.

The prosecution's appeal is based on the argument that this first-instance determination involves a misinterpretation of law, a misapprehension of facts, and an unfair sentence.

From July to October 2024, A and others were indicted and detained on charges of obtaining approximately 7.1 billion won in unjust enrichment by manipulating the price of a specific coin listed on a domestic virtual asset exchange. They allegedly repeatedly placed high-price buy orders and low-price sell orders to artificially inflate trading volume, and used fictitious buy orders to create the appearance of buying pressure flowing in. The prosecution had sought a 10-year prison term, a fine of 23 billion won, and a forfeiture of 8.015 billion won for A, and a six-year prison term for B.

The prosecution assessed the case as significant because it is the first instance in which a court has recognized guilt in an indictment applying the Virtual Asset User Protection Act. It particularly emphasized that this is the first ruling to recognize the confiscation of the principal funds mobilized for price manipulation.

A prosecution official said, "In the appellate trial, we plan to make every effort to maintain the indictment, including supplementing our proof and explanations, so that a forfeiture order can also be imposed, in line with our sentencing recommendations, for the approximately 7.1 billion won in unjust enrichment."