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Media Coverage‘1.4 Trillion Won Cryptocurrency Scam’ Haru Invest Evades Capital Erosion by Embezzling Digital Assets
The Haru Invest scam, which swindled 1.4 trillion won worth of digital assets from customers, appears to have been initiated to save the company from a state of capital erosion. When the 'algorithm trading' method, which promised annual returns of 12-16% with no risk, failed to deliver, the company even created fabricated profit verification posts to cover up the issue. According to sources from the cryptocurrency industry and legal circles on the 11th, the Seoul Southern District Prosecutor's Office's Joint Investigation Team on Cryptocurrency Crimes indicted and detained A and B, co-representatives of Blockcrafters, which operated Haru Invest, on charges of fraud under the Specific Economic Crimes Aggravated Punishment Act. The Chief Operating Officer (COO), C, was indicted without detention on similar charges. They are accused of embezzling 1.39 trillion won worth of digital assets from 16,347 investors. (omitted) The attorneys representing the victims, Pureun “Ian” Hong and Hyeonsu “Elliot” Jin from Discent Law Firm, stated, 'It has become evident during the investigation that Haru Invest’s business deteriorated into a 'Ponzi scheme'. The truth must be revealed in court.'
2024-03-11 biz.chosun -
Media Coverage
Details of the Indictment Against Haru Invest Executives for the '1 Trillion KRW Coin Exit Scam'
Prosecutors have specified in the indictment against Haru Invest executives, who deceived customers into depositing virtual assets worth 1.4 trillion KRW and then prohibited withdrawals, that they entrusted the management of 1.31 trillion KRW worth of virtual assets to an unqualified operator who did not meet the selection standards. According to the indictment filed on the 10th against the joint CEOs of Haru Invest, Mr. A (44) and Mr. B (40), and the business director Mr. C (40), they began entrusting the management of 90 Bitcoins in August 2020 to Mr. D, an unqualified operator who did not meet the criteria for selecting external asset managers. (omitted) The Virtual Asset Crime Joint Investigation Unit of the Seoul Southern District Prosecutors' Office (headed by Chief Prosecutor Lee Jeong-ryeol) filed detention indictments against these individuals on the 22nd and indicted the company's Chief Operating Officer, Mr. E (38), without detention. Hyeonsu “Elliot” Jin and Pureun “Ian” Hong, Managing partner at Decent Law Firm, representing the victims, stated, "This case is a global fraud scheme, with victims from more than 20 different nationalities. Their crimes must be thoroughly revealed during the trial process."
2024-03-10 Financial News -
Media Coverage
'We Mine Dormant Wallets and Give Away Bitcoin,' Beware of New Cryptocurrency Scam
As the price of Bitcoin has risen to the 90 million KRW range, the once-joking concept of a '100 million KRW Bitcoin' era is now on the horizon. With growing interest in the virtual asset (cryptocurrency) market, companies suspected of promoting new cryptocurrency-related scams are becoming more prevalent. According to the National Police Agency on the 7th, there were 281 cases of illegal activities related to virtual assets last year, more than double the number from the previous year (2022, 108 cases). Illegal activities in the virtual asset sector are broadly classified into three categories: Ponzi schemes and pyramid sales, illegal exchange activities, and other fraudulent purchasing schemes. However, new types of crimes continue to emerge. Recently, there have been cases where companies encourage investments by claiming that if you invest in a business mining Bitcoin from a large dormant wallet, you will receive a share of the Bitcoin. This has particularly spread among the elderly, with some individuals investing amounts ranging from 10 million KRW to tens of millions of KRW. (omitted) Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, advised, "Even if they promise to distribute profits from successful Bitcoin mining, investors have no way to verify whether the Bitcoin mining has actually succeeded. If someone is promoting coin investment by showcasing large profits, you should first suspect it might be an investment scam. If you suspect an investment scam, seek help from a lawyer specializing in cryptocurrency fraud and file a criminal complaint or a lawsuit for the return of your investment."
2024-03-07 Korea Economy -
Media Coverage
Kimchi Coins Facing Delisting Even in Court, What Are the Chances of an Injunction Being Granted?
As the domestic virtual asset project SOMESING filed for an injunction against delisting on the 5th, the industry largely expects the request to be dismissed. This is because the courts have previously dismissed all delisting injunction applications. The judiciary has consistently recognized the authority and autonomy of virtual asset exchanges in deciding whether to continue supporting certain listings. (omitted) The court also emphasized exchange autonomy when dismissing the injunction request for Wemix’s delisting in December 2022. At the time, the court stated, "To effectively protect investors by maintaining the transparency and integrity of the virtual asset market," the exchange’s decision to continue or terminate trading support "should generally be respected unless there are special circumstances." Considering previous decisions, it seems unlikely that SOMESING will avoid delisting. Hyeonsu “Elliot” Jin, Attorney at Descent Law Firm, noted, "If there are no particularly different facts compared to previous cases, the same outcome is expected," and he assessed the likelihood of the injunction being granted as low.
2024-03-07 etoday -
Media Coverage
Stocks Losing Momentum, but Coins on the Rise with 'Value-Up'?
The concept of 'value-up,' which boosts corporate value by expanding shareholder returns, has emerged in the virtual asset market. The protagonist is Uniswap, the leading decentralized exchange project. This is done by expanding a type of dividend. With this news, other coin projects with high potential for shareholder returns have gained attention, leading to a sharp rise in related coin prices, reminiscent of the 'low PBR (Price-to-Book Ratio) market' in the domestic stock market. (omitted) The proposal involves distributing Uniswap's profits to investors who have staked 'UNI,' which plays a similar role to shares in the stock market. In other words, it is akin to Uniswap, the exchange, distributing its earnings to shareholders. Legally, there is not expected to be a significant issue. This is because Uniswap did not conduct an Initial Coin Offering (ICO) and distributed UNI tokens for free. Hyeonsu “Elliot” Jin, Attorney at Descent Law Firm, stated, "Although staking is not clearly regulated, and the SEC may raise concerns, based on past precedents, it seems unlikely that the SEC will raise an issue regarding the securities nature of Uniswap."
2024-02-26 Maeil Economy -
Media Coverage
Investors Deceived by 'Scam Coin' through Celebrity Endorsements in Promotions
"Scam Coin" has emerged as a major crime in the virtual asset industry, with suspicions that popular YouTuber Oking and former soccer player Lee Chun-soo are involved in fraudulent virtual asset schemes. A scam coin refers to a virtual asset created for fraudulent purposes. Last year, the prosecution directly mentioned "scam coins" in indictments, closely monitoring related crimes. The typical method of scam coin operations involves perpetrators running a compartmentalized organization, gaining victims' trust, inflating the coin's price, and then dumping their holdings at a high point. (omitted) There have also been cases where public officials were implicated, leading to formal complaints. The Chief of a local police department in Gyeonggi Province, known as Chief A, was reported to the Corruption Investigation Office for High-ranking Officials (CIO) after it was revealed that he met with Mr. Choi, the former CEO of W Coin. Choi is currently under investigation for another coin, G Coin, which is suspected to be a scam coin. Attorneys Hyeonsu “Elliot” Jin and Pureun “Ian” Hong of Descent Law Firm, who filed the complaint, stated, "Despite investigating Mr. Choi, the CEO of a virtual asset company, in his jurisdiction, Chief A had personal dealings and took photographs with him. Even though he had personal involvement, he failed to report it to the National Police Agency or the Ministry of Interior and Safety, nor did he request to be recused." Chief A defended himself, saying, "I had no idea that Mr. A, who I knew as a friend's son, was involved in scam coin allegations."
2024-02-25 Financial News -
Media Coverage
Attorney Pureun “Ian” Hong Files Complaint Against Current Police Officer Who Met with 'Scam Coin' CEO Under Investigation
A high-ranking police officer who met with a CEO under investigation for suspected "scam coin" (cryptocurrency fraud) has been reported to the Corruption Investigation Office for High-ranking Officials (CIO). Attorneys Hyeonsu “Elliot” Jin and Pureun “Ian” Hong of Descent Law Firm filed a complaint on the 19th against Chief A of a local police department in Gyeonggi Province for violating the Public Official Conflict of Interest Prevention Act and neglect of duty. The two attorneys are representing victims who invested in cryptocurrency B-Coin. The complainants stated, "Chief A took personal interest in a case where his department was investigating Choi, the CEO of a cryptocurrency company, and took photographs with him." They added, "Despite having a personal relationship with the suspects, Chief A did not report it to the National Police Agency or the Ministry of Interior and Safety, nor did he request to be recused." They further explained, "Chief A invited Choi to his office, took photographs, and the suspects used these photos on social media (SNS) to further their fraud scheme." They concluded, "Chief A neglected his duties by forming personal relationships with suspects, forgetting his role in the investigation."
2024-02-19 News1 -
Media Coverage
'Terra-Luna Incident' Raises Attention on the Determination of Cryptocurrency as Securities
With the extradition of Han Chang-joon, former CEO of Chai Corporation, who is considered central to the 'Terra-Luna incident,' the prosecution’s investigation is expected to gain momentum. The industry is paying close attention to whether this will accelerate the determination of the securities nature of virtual assets. (omitted) The virtual asset industry is watching closely as the prosecution’s investigation picks up speed, speculating that the judgment on the securities nature of Terra and Luna may also progress. The prosecution has charged Shin and others with violations of the Capital Markets Act, classifying Terra and Luna as investment contract securities under the law, but the final judgment will be made by the court. Legal experts view the Terra-Luna trial as the starting point for determining the securities nature of virtual assets in Korea. The key issue is whether the promises made to investors regarding TerraUSD, an algorithmic stablecoin issued by Terraform Labs, and Luna Coin, used to maintain its value, constitute an investment contract. Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, specializing in virtual assets, said, “There is a high possibility that fraud charges under the Special Economic Crimes Act will be recognized. The issue lies in whether there was a violation of the Capital Markets Act,” adding, “Regardless of punishment, this could be the starting point for determining the securities nature of virtual assets.”
2024-02-06 etoday -
Media Coverage
Ban on Bitcoin Spot ETF Violates the Principle of Legalism in Regulation
It is important to point out that the U.S. Securities and Exchange Commission (SEC)’s recent approval of Bitcoin spot ETPs (Exchange-Traded Products) submitted by 11 asset management companies on the 11th calls into question the Financial Services Commission (FSC)’s repeated stance against Bitcoin spot ETFs, which violates the principle of legalism in regulation, as stipulated in Article 4, Clause 1 of the Basic Administrative Regulations Act. (omitted) Attorney Pureun “Ian” Hong from Descent Law Firm also pointed out that ▶ there is no clear legal basis under the current Capital Markets Act to prohibit a Bitcoin spot ETF, ▶ the FSC is aware of this and, while claiming there is a potential violation of the Capital Markets Act, has not presented specific provisions, ▶ and that it is highly problematic that the FSC has banned Bitcoin ETF brokerage based on arbitrary judgments by an administrative body rather than legal grounds.
2024-01-23 NBN NEWS -
Media Coverage
Legal Experts Argue 'Bitcoin Spot ETF is Possible' Despite Opposition
The main reason the financial authorities have stated that a domestic Bitcoin spot exchange-traded fund (ETF) cannot be approved is due to a violation of the current 'Capital Markets Act.' The authorities argue that Bitcoin cannot be regarded as a type of underlying asset defined under the Capital Markets Act. However, the legal community offers a completely different interpretation, suggesting that it ultimately depends on the will of the financial authorities. (omitted) Article 4, Clause 10 of the current Capital Markets Act defines the types of underlying assets. These include: 1) financial investment products, 2) currency (including foreign currencies), 3) general goods, 4) credit risk, and 5) other risks belonging to natural, environmental, or economic phenomena that can be reasonably and properly assessed or priced using indicators, interest rates, or other methods. The Financial Services Commission (FSC) interprets this clause to mean that virtual assets are not included in the investment targets of collective investment vehicles such as ETFs. However, they distinguish Bitcoin futures ETFs, which are currently tradable, as tracking a derivative futures index and, therefore, differing in nature from a Bitcoin spot ETF that involves the actual purchase and holding of Bitcoin. However, the legal community focuses on Clause 10, Item 5 (assets that can be reasonably and properly evaluated or priced). Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, explained, “Item 5 is a broad provision. Even if Bitcoin does not fall under financial investment products, currency, general goods, or credit risk, it is evident that Bitcoin can be classified as an economic risk that can be reasonably and properly priced, making it at least qualify as an underlying asset.” He further added, “The law only requires a simple condition: that the price of the underlying asset can be reasonably and properly calculated or evaluated.”
2024-01-23 Herald Economy -
Media Coverage
'I Trusted It Was a Well-Known Securities Firm'—Securities Firm Impersonation Scam
These days, many people use securities company apps for mobile trading when investing in stocks. Taking advantage of this, investment scams that impersonate securities company apps and executives are on the rise. Reporter Lee Sun-young has the details. (omitted) Pureun “Ian” Hong, Financial Fraud Specialist Attorney, said, "Apps installed through external links are completely exposed to hacking risks. Furthermore, in the case of real stocks, securities companies have safety mechanisms in place to protect investors even if the company goes bankrupt. Depositing money into an account other than your own (as instructed by the scam) is highly likely to be fraud, so please be cautious."
2024-01-08 MBC Gyeongnam -
Media Coverage
Will Binance Be Held Back by Its Lawsuit with the U.S. SEC?
After reaching the largest settlement in history with the U.S. government, Binance continues its lawsuit with the U.S. Securities and Exchange Commission (SEC), and Binance founder Changpeng Zhao has taken a firm stance against the SEC. On the 13th (local time), Binance submitted documents to the court arguing that "the SEC has focused on transactions in which tokens were purchased from other anonymous token holders on Binance's website," and "there was no contract with the initiators of these transactions to invest funds." They contended that the SEC's claims of illegal investment contracts and securities sales by Binance do not hold, and the lawsuit should be dismissed. They also mentioned that the term "investment contract" is ambiguous when applied to digital asset transactions. Binance emphasized, "The term 'investment contract' is vague when applied to digital assets, and this issue should be decided by Congress, not the courts." (omitted) Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, stated, "The SEC's lawsuit is regarding violations of securities laws. The settlement with the U.S. government is a separate matter," and added, "Binance's motion to dismiss the lawsuit is unlikely to be accepted in principle. The settlement may work against Binance in the ongoing SEC lawsuit." As the SEC expressed its intent to proceed with the lawsuit, Changpeng Zhao's planned trip to the UAE was also canceled. Previously, a U.S. court granted Zhao permission to travel to his home in the UAE, but at the request of the Department of Justice, he was ordered to remain in the U.S. until the SEC's trial ruling in February next year. Attorney Jin explained, "The UAE is not a country with an extradition treaty with the U.S., and it has never accepted such requests from the U.S. Moreover, a significant portion of Changpeng Zhao's assets are understood to be outside the U.S.," adding, "The court likely determined that if Zhao were to leave the country, there is no guarantee he would return to the U.S. In the end, they saw the potential for Zhao to flee."
2023-12-13 Korea Economy
