A South Korean courtroom has acquitted Lee Hyung-soo, CEO of crypto funding agency Haru Make investments, of prison fraud costs 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 12 months after Haru abruptly froze buyer withdrawals and shut down operations in mid-2023.
The ruling follows intense scrutiny from prosecutors, buyers, and the broader public, because the case turned one of many nation’s most outstanding crypto-related authorized battles.
Lee and several other executives at Haru Make investments and its mother or father 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 buyers. The prosecution had sought a 23-year jail sentence for Lee, arguing the funding mannequin constituted deliberate fraud.
Courtroom Finds Lack of Legal 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 beneath South Korean regulation. The judgment referenced exterior elements such because the collapse of the FTX trade and subsequent crypto market turbulence, which contributed to Haru’s incapacity to satisfy investor obligations.
Based on 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 Track as a result of South Korean privateness norms, had been additionally acquitted of fraud costs. 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 buyers.
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 keep up that he’s working towards compensating victims by way of chapter restoration efforts.
Wider Implications for South Korea’s Crypto Regulation
The result of the Haru Make investments case might affect future authorized interpretations of crypto fraud in South Korea, particularly in circumstances 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 belongings, and this high-profile ruling might immediate additional authorized clarification round custodial tasks and investor safety within the crypto business.
Lee’s acquittal, whereas relieving him of prison costs, leaves unresolved issues for 1000’s of buyers nonetheless awaiting compensation. The chapter proceedings and potential civil lawsuits will seemingly proceed to form the aftermath of one in all South Korea’s most important crypto collapses to this point.
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