Korean altcoin issuer detained over $16.1m fraud allegations

A South Korean altcoin issuer was arrested by the Seoul Southern District Prosecutors’ Office’s Virtual Asset Crime Joint Investigation Team on March 19, facing fraud charges.

The unnamed individual is accused of defrauding investors of $16.1 million, an arrest that follows after a crypto market maker’s failed attempt to flee by sea in December last year.

On Dec. 20, 2023, the individual, known under the alias Jon Bur Kim and real name Park, aged 42, was intercepted by Coast Guard officials while attempting to escape to China via a fishing boat from Jindo. His escape was hindered by a storm, leading to the boat’s docking at Mokpo.

Park, who had garnered a significant social media following by showcasing his luxury sports car collection, is currently detained and undergoing trial at the Haenam Branch of the Gwangju District Court. He is charged with illegally manipulating coin transaction prices, including providing bribes to crypto exchange employees to artificially inflate prices.

Prosecutors allege that from February 2021 to April 2022, Park collaborated with the arrested token issuer to launch and promote fraudulent cryptocurrencies, commonly referred to as “scam coins.” They are accused of using deceitful practices such as false data disclosure and market manipulation to convince investors of the legitimacy of their coins.

The prosecution further suggests that the duo might have engaged a “coin listing broker” to facilitate the listing of these coins, which subsequently led to rapid price surges, enabling them to sell their holdings for substantial profits.

The case against Park includes investigating his potential involvement in the crimes attributed to the unnamed token issuer as authorities continue to unravel the extent of their collaboration. The incident is part of a broader trend of scrutiny against altcoin issuers in South Korea amid growing concerns over the proliferation of scam coins and the involvement of celebrities in low-cap altcoin controversies.

Meanwhile, on March 8, U.S. prosecutors revealed preparations to appeal a Montenegrin high court ruling on the extradition of Terraform Labs’ former CEO, Do Kwon, to South Korea. The development is part of a complex legal battle involving multiple nations, including South Korea and the United States, both of which are seeking Kwon’s extradition on charges relating to the Terra ecosystem’s $40 billion collapse.

The charges against Kwon in the U.S. include fraud and market manipulation, with South Korea also pressing charges of fraud and capital markets law violations. Kwon’s legal team has shown a preference for his extradition to South Korea, emphasizing the proximity to his family and the potential for a 40-year prison sentence.

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