A Korean court has acquitted Lee Hyung-soo, the representative of Haru Invest, of cryptocurrency fraud charges amounting to approximately 904 billion won (about $650 million). Given the scale of investor losses in the domestic cryptocurrency industry, this case drew significant attention.
The 15th Criminal Division of the Seoul Southern District Court acquitted the representative on charges of violating the "Special Economic Crime Punishment Act" on June 21, determining that while Haru Invest's asset management method was inappropriate, there was insufficient evidence to definitively classify it as a crime. Judge Yang Hwan-seung stated, "Management's negligence is acknowledged, but it is difficult to consider it as 'fraudulent behavior' that warrants criminal punishment."
The representative was indicted alongside Park and Song, co-representatives of Blockrafters, who were also acquitted. However, Kang, the former COO of Blockrafters, was sentenced to two years in prison with a three-year suspended sentence and 120 hours of community service for embezzlement.
The court explained that Haru Invest had managed customer assets through a "market-neutral strategy" and that the collapse of external partners like FTX critically impacted the company's sustainability. Notably, the defendants' direct asset deposits were cited as evidence of their belief in the business's continuity. It was confirmed that the two defendants Park and Song invested about 5.5 billion won (approximately $397,000), while the representative and his family invested about 7.4 billion won (approximately $517,000).
According to the verdict, the defendants sought ways to recover losses using some assets even after suspending withdrawals, and actual payments to customers were made. The court interpreted the interest payments as based on actual earnings rather than negligence.
The incident originated in June 2023 when Haru Invest suspended all transactions, claiming "false information" from the consignment management company, followed by closing its Seoul office and spreading investor anxiety. Delio, a lower-tier deposit institution, also suspended transactions the next day, shocking the industry.
Subsequently, the prosecution froze hundreds of billions of won in assets overnight and requested exit bans for key executives. The three main defendants were arrested on charges of misappropriating approximately 1.148 trillion won (about $826 million) in investment funds. During the trial, an enraged victim even stabbed the representative in court, now facing up to 10 years in prison for attempted murder.
Regarding responsibility related to the FTX chain bankruptcy, the court determined that the defendants were deceived by false reports from a third-party asset management company representative. The court acknowledged potential supervisory negligence and possible breach of good faith contract obligations but found it difficult to classify the actions as fraudulent behavior warranting criminal punishment.
This verdict serves as an important precedent in the cryptocurrency market's uncertainty, establishing how judicial authorities will determine specific negligence and legal responsibility.
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