A South Korean courtroom has acquitted Lee Hyung-soo, CEO of crypto funding agency Haru Make investments, of prison fraud expenses linked to the alleged mismanagement of investor funds amounting to over $650 million.
The choice, issued on Tuesday by the Seoul Southern District Courtroom, comes almost a yr after Haru abruptly froze buyer withdrawals and shut down operations in mid-2023.
The ruling follows intense scrutiny from prosecutors, traders, and the broader public, because the case turned one of many nation’s most outstanding crypto-related authorized battles.
Lee and a number of other executives at Haru Make investments and its mum or dad firm Blockcrafters had been accused of misrepresenting funding dangers whereas providing high-yield returns—allegedly as much as 25% yearly, earlier than the corporate suspended operations.
Prosecutors initially estimated damages at over $1 billion affecting 16,000 customers however later revised the determine to roughly $650 million tied to round 6,000 traders. The prosecution had sought a 23-year jail sentence for Lee, arguing the funding mannequin constituted deliberate fraud.
Courtroom Finds Lack of Prison Intent Amid Broader Market Fallout
The courtroom decided that whereas there was managerial failure, Lee’s actions didn’t fulfill the factors for prison deception below South Korean legislation. The judgment referenced exterior elements such because the collapse of the FTX alternate and subsequent crypto market turbulence, which contributed to Haru’s incapacity to satisfy investor obligations.
In line with report, the courtroom supported Lee’s declare that Haru’s enterprise mannequin concerned authentic funding methods and generated actual earnings, distinguishing the case from deliberate Ponzi-style operations.
Co-CEOs of Blockcrafters, recognized solely by their surnames Park and Tune attributable to South Korean privateness norms, had been additionally acquitted of fraud expenses. Kang, Blockcrafters’ chief working officer, was cleared of fraud however discovered responsible of embezzlement and sentenced to 2 years in jail.
The decision leaves open the trail for civil litigation, because the courtroom emphasised that the ruling solely pertains to prison legal responsibility and doesn’t absolve the defendants from monetary accountability to affected traders.
In a separate however associated incident, Lee was bodily attacked throughout courtroom proceedings in August 2023 by a person claiming to have misplaced 100 BTC, price tens of millions of {dollars}, in Haru’s failed funding platform.
The attacker was sentenced to 5 years in jail in April 2024. Lee survived the stabbing with non-fatal accidents and has continued to take care of that he’s working towards compensating victims by means of chapter restoration efforts.
Wider Implications for South Korea’s Crypto Regulation
The end result of the Haru Make investments case might affect future authorized interpretations of crypto fraud in South Korea, particularly in instances the place enterprise failure is pushed by exterior market shocks somewhat than intentional deception.
South Korea has been actively updating its regulatory stance on digital property, and this high-profile ruling might immediate additional authorized clarification round custodial duties and investor safety within the crypto trade.
Lee’s acquittal, whereas relieving him of prison expenses, leaves unresolved issues for 1000’s of traders nonetheless awaiting compensation. The chapter proceedings and potential civil lawsuits will seemingly proceed to form the aftermath of certainly one of South Korea’s most important crypto collapses so far.
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