Lee Byung-gul, the chief executive officer of South Korea’s failed cryptocurrency exchange V Global, will serve 25 years in prison after his conviction was upheld by the Supreme Court of Korea on Friday. The court upheld an appeal court’s sentence on the CEO for operating a pyramid scheme between 2020 and 2021 that defrauded thousands of investors, local media reported.
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- Three other unnamed executives of V Global had their sentences of four to 14 years in prison upheld by the Supreme Court on the same day, according to the Yonhap News Agency.
- A spokeswoman at the Supreme Court said the full names of the convicted individuals were redacted in sentencing documents provided to authorized local media, citing protection of personal information. Forkast News has previously reported Lee’s full name after he was named in the conviction by a lower court.
- The lower court had ruled that the criminal proceeds from the pyramid scheme will not be confiscated, stating the difficulty in specifying the exact amount of money amassed by V Global. The Supreme Court upheld this decision, Newsis reported. The Supreme Court spokeswoman declined to comment on this when contacted by Forkast News.
- V Global defrauded about 50,000 investors of 2.8 trillion Korean won between July 2020 to April 2021 (now equivalent to US$2.26 billion), according to the court ruling reported by local media.
- V Global promised 300% returns on investments in its self-issued token V Cash. The exchange required new members to create accounts with a 6 million won deposit ( US$4,860) offering a guaranteed return of 18 million won. The V Cash token became worthless when the exchange was shut down in September 2021
- The exchange also reportedly promised users 1.2 million won in commission if they successfully referred another investor. Some money was returned to users, but those funds were taken from newer users’ deposits, the usual method in a pyramid scheme, the court found.
- In December, seven other executives of V Global were found guilty of conspiracy in the pyramid scheme and sentenced to three to eight years by a district court, according to local publication The Economist. They are currently appealing the conviction, Yonhap reported.
- The V Global convictions come as South Korean prosecutors are trying to apprehend Terraform Labs Pte. co-founder and South Korean national Kwon Do-hyung on charges including fraud and Capital Markets Law violations. Kwon’s Terra-Luna stablecoin and crypto project collapsed in May last year, blowing away billions of dollars and sparking a domino chain of failures across the industry. Do Kwon is understood to be living in Serbia and has denied the charges against him.
- In another case involving the collapse of an exchange, Sam Bankman-Fried, the founder and former CEO of the Bahamas-based FTX trading platform that failed in November, is facing eight criminal counts including wire fraud and conspiracy to commit money laundering. Lawyers told Forkast that if convicted, he could face decades in prison. Bankman-Fried has pleaded not guilty to all charges in a U.S. court.
See related article: Why is it harder to arrest Terra-Luna founder Do Kwon than FTX’s Sam Bankman-Fried?