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Spreading false positive news to inflate price by 1,000 times↑... selling all at once caused hundreds of victims to lose money
First case applying 'fraudulent unfair trading' since the enforcement of the Virtual Asset User Protection Act
A group that made hundreds of millions of won by inflating the price of meme coins (trending cryptocurrencies) with false positive news and then selling off their holdings all at once has been sent to trial.
The Seoul Southern District Prosecutors' Office's Joint Investigation Unit for Virtual Asset Crimes announced on the 27th that it has arrested and indicted two individuals, including virtual asset influencer Mr. A, on charges of violating the Act on the Protection of Virtual Asset Users, etc., and indicted one other individual without detention.
Two individuals who assisted Mr. A in his escape were also indicted without detention on charges including harboring a criminal.
They are accused of issuing meme coins in January-February last year, spreading false positive news to inflate prices, and then selling them all at once, pocketing illegal profits worth approximately 400 million won.
They inflated the number of followers on the official social media (SNS) of the issued coin to make it appear as if there was high investor interest. In reality, while holding most of the issued coins themselves, they distributed the coins across multiple virtual asset wallets to entice general investors to buy.
Notably, Mr. A, who has thousands of followers, was found to have pretended to be an uninterested third party and recommended buying the coin by posting messages like "You can make 300 times profit" on social media.
The coin they created surged in price by 1,000 to 1,100 times within 26 hours, and approximately 6,000 people engaged in buying. Subsequently, by selling off their holdings all at once, 256 investors incurred losses totaling approximately 900 million won.
It was investigated that the group started the crime with approximately 10 million won and pocketed illegal profits of about 400 million won within 30 hours.
This case began with a victim's complaint, but it was closed as an unsolved case during the police investigation stage due to Mr. A and others claiming they were "hacked" or "lent their accounts via Telegram."
Subsequently, the prosecution initiated an investigation following a complaint from the Financial Services Commission. In collaboration with related agencies such as the Financial Supervisory Service, Korea Financial Security Institute, and National Tax Service, they traced the virtual asset issuance and distribution process and the flow of criminal proceeds to uncover the crime's structure.
The prosecution stated that this case is the first to apply the 'fraudulent unfair trading' provision since the enforcement of the Virtual Asset User Protection Act. They also explained that it is the first case to legally prosecute virtual asset crimes involving decentralized exchanges (DEX), which were previously considered regulatory blind spots due to unclear operating entities.
The Seoul Southern District Prosecutors' Office emphasized, "Based on legal expertise in the field of virtual asset crimes, we will resolutely respond to actions that disrupt the virtual asset market and undermine public trust."
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