In a recent ruling, the Supreme Court of South Korea acquitted Dunamu Chairman Song Chi-hyung of fraud charges related to the manipulation of platform data on the Upbit crypto exchange. This decision comes after a long legal battle, in which prosecutors alleged Song and a group of executives manipulated order volumes by creating fake member accounts on Upbit. However, all three courts involved in the case agreed that the prosecution had used illegal methods to obtain evidence. This article delves into the details of the case and its implications for the cryptocurrency industry in South Korea.
Prosecutors accused Song Chi-hyung and a group of executives at Dunamu of creating fake member accounts on Upbit between September and November 2017. They claimed that these accounts were used to buy and sell Bitcoin, artificially boosting trading volumes on the platform. The alleged manipulation involved moving BTC 11,550 across 26,000 wallets, resulting in transactions worth approximately $93 million. Furthermore, the prosecutors asserted that these activities helped the group generate profits of nearly $114 million during the bear market.
Initially, a district court cleared Song and the executives of the charges, and this decision was upheld by a branch of the high court. However, the prosecution was relentless in their pursuit of a conviction and took the case to the Supreme Court. Ultimately, all three courts concluded that the prosecution had obtained evidence through illegal means. It was revealed that the prosecution officials had unlawfully accessed information from Dunamu’s Amazon-provided cloud accounts. Defense attorneys argued that the warrants granted to the prosecutors did not authorize the search of remote servers. Additionally, they contended that seizing the executives’ laptops and USB storage devices exceeded the prosecution’s authority.
The acquittal of Song Chi-hyung and the other executives has significant implications for the cryptocurrency industry in South Korea. Upbit, which is operated by Dunamu, has emerged as the market leader in the country, accounting for approximately 80% of the domestic market. This success can be attributed, in part, to a successful partnership with the neobank K Bank. Thanks to this partnership, new customers can easily open wallets and associated bank accounts online, complying with South Korean regulations that require real-name verified bank accounts for crypto trading. Traditionally, some banks necessitate customers to visit branches in person to establish these accounts, a cumbersome process that Upbit has managed to circumvent.
The acquittal of Dunamu Chairman Song Chi-hyung and the other executives of fraud charges related to the manipulation of platform data on Upbit is a significant development in the South Korean cryptocurrency industry. The courts’ verdict, based on the improper acquisition of evidence, highlights the necessity for law enforcement agencies to adhere to legal procedures in investigating and prosecuting cryptocurrency-related crimes. Going forward, this ruling may influence the regulatory landscape in South Korea, as it emphasizes the importance of protecting individuals’ rights and upholding the integrity of the legal process in the cryptocurrency sector.
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