Cryptocurrency Fraud

Cryptocurrency is a digital currency used online based on blockchain technology, and, unlike physical currency, it has no physical form.

It secures the safety and transparency of transactions through encryption technology, and common examples include Bitcoin and Ethereum.

First, investment fraud using an ICO is a method in which an offender disguises a project as an innovative blockchain venture or a profitable investment opportunity, raises funds from investors, and provides virtual assets or currency.

In reality, however, the offender usually has neither the ability to issue the virtual asset nor the capacity to carry out the project, so recovering the invested funds through normal means is not possible.

A common method is to lure investors with the false claim that "early investors can expect high returns through listing on a well-known exchange."

Cryptocurrency multi-level fraud also occurs frequently.

In such cases, a multi-level method is used to recruit investors, but there is no actual structure for generating profit, so once the inflow of new investors stops, existing investors suffer losses.

Cryptocurrency price manipulation is also one of the major fraud methods.

Offenders exaggerate the value of a virtual asset or spread false analysis through social media, online communities, and stock-tip chat rooms, systematically inflate trading volume to drive the price up artificially, and then sell at the peak to take profits.

As a result, ordinary investors suffer losses from the sharp price drop.

Fraud through creating a fake exchange or issuing copycat coins is also a serious problem.

These offenders create fake websites that imitate real exchanges to induce investment, or issue fake coins with names similar to well-known virtual assets to deceive investors and cause harm.

Market manipulation is not simply fraud, but a crime that violates the provisions prohibiting market manipulation under the Financial Investment Services and Capital Markets Act.

However, where there is no profit gained or loss avoided through the violation, where it is difficult to calculate, or where the amount equal to 6 times that profit or loss avoided is 500 million won or less, the upper limit of the fine is set at 500 million won.

Where the profit gained or the loss avoided through the violation exceeds 500 million won, the term of imprisonment is increased according to the following standards.

When a fake exchange is created, beyond simple fraud, funds are often raised without formal registration with the financial authorities, so a person may also be punished for violation of the Act on the Regulation of Unauthorized Fund-Raising.

Unauthorized fund-raising is the illegal act of gathering funds from many people without a financial business license and promising to repay them.

Such conduct is treated as a serious crime that deceives investors and defrauds them of their funds, and it is punished strictly.

If you have been indicted on charges of cryptocurrency fraud, then to receive a reduced sentence, you first need to clearly identify the circumstances of the offense and your role, and work to narrow the scope of your responsibility.

For example, if you can prove that you did not take a leading part in the offense and performed only a limited role as a peripheral participant, this can serve as grounds for a reduced sentence.

After the incident, voluntarily surrendering to the investigative authorities or actively cooperating by submitting relevant materials is important.

Such cooperation may be viewed favorably by the court and can lead to a reduction of the sentence.

Efforts to make the victim whole are also very important.

Promptly reaching a settlement with the victim, returning the defrauded money, or depositing it in court can act as factors for a reduced sentence.

On the other hand, destroying evidence, making false statements, or obstructing the investigation after the crime are factors that make a sentence reduction difficult, so they must be avoided.

Ultimately, to receive a reduced sentence in a cryptocurrency fraud case, you need to accurately recognize your role and the scope of your responsibility, cooperate actively in the investigation and trial proceedings, and do your best to make the victim whole.

The court considers these points together, and they can have a positive influence on its sentencing decision.

For a cryptocurrency fraud suspect, depending on the matter, complex legal issues beyond fraud charges, such as violation of the Unauthorized Fund-Raising Act and the Electronic Financial Transactions Act, may apply.

From the early stage of the case, it is therefore important to organize the facts, identify the legal issues, and promptly prepare a defense strategy.

Settlement with the victim, use of the court deposit system, and preparation of materials for responding to the investigative authorities also play an important role in lowering the actual level of punishment, so it is advisable to plan a specific response direction in advance.

If you are a victim, you should first gather materials that can objectively prove the facts of the harm.

Common examples include deposit and withdrawal records, cryptocurrency wallet addresses, messenger and call logs, and investment solicitation materials.

Based on these, you can file a criminal complaint with the police or the prosecutors' office, and you can then seek to recover your losses through a civil claim for damages.