A South Korean court threw out the criminal fraud charges against Lee Hyung-soo, CEO of the failed crypto firm Haru Invest. This means he won’t be going to jail, despite accusations of mishandling over $650 million of investor money.
The Case Against Haru Invest
The case exploded after Haru Invest suddenly froze withdrawals and shut down in mid-2023. Prosecutors accused Lee and other executives of misleading investors about the risks involved while promising sky-high returns—up to 25% annually! Initially, the estimated losses were over $1 billion affecting 16,000 people, but this was later revised down to around $650 million and 6,000 investors. Prosecutors wanted Lee to serve 23 years in prison.
Court Rules in Favor of Lee
The court decided that while Haru Invest’s management messed up big time, Lee’s actions didn’t meet the legal definition of criminal fraud in South Korea. They pointed to the collapse of FTX and the general crypto market crash as major contributing factors to Haru’s downfall. The court accepted Lee’s argument that Haru’s investments were legitimate and actually profitable, unlike a typical Ponzi scheme. The other top executives at Haru Invest and its parent company were also acquitted. However, Blockcrafters’ COO, Kang, was found guilty of embezzlement and got a two-year prison sentence.
What Happens Now?
Even though Lee is off the hook criminally, the ruling doesn’t protect him from civil lawsuits. Investors can still sue him to get their money back. This means the legal battle isn’t over yet.
The Stabbing Incident
Adding to the drama, Lee was stabbed during a court hearing by someone who lost a fortune (100 BTC!) through Haru Invest. The attacker got a five-year prison sentence. Lee survived and says he’s trying to compensate victims through bankruptcy proceedings.
Impact on South Korea’s Crypto Regulations
This case could significantly impact how South Korea handles future crypto fraud cases. The court’s decision highlights the complexities of separating intentional fraud from business failures caused by market turmoil. It’s likely to lead to more clarity on investor protection and custodial responsibilities in the South Korean crypto industry. For now, thousands of investors are still waiting for compensation, and the fallout from this massive crypto collapse continues.