• A Goyang court sentenced a money launderer to two and a half years in prison for his role in a fake-coin scam.
  • 14 victims were cheated out of about 501 million won.
  • It is the first confirmed conviction under Korea’s Virtual Asset User Protection Act in a fraud case that no regulator referred to prosecutors. 

 

A South Korean court has jailed a money launderer for two and a half years in a fake-coin investment scam, using a new crypto protection law for fraud.

Prosecutors are now using the Virtual Asset User Protection Act against ordinary scams, even without a referral from regulators.

What did the court decide in the fake-coin scam case?

A court in Goyang found that a ring ran a fake investment website and sold tokens that did not exist. The scammers told buyers the tokens were cheap and would pay off once they were listed on an exchange even though they never planned to give buyers anything.

The man who laundered the money, known only as “A,” was sentenced to two and a half years in prison.

“A” became a registered gift-certificate dealer, giving the scammers a bank account to receive the money in. From late December 2024 to February 2025, fourteen victims sent him about 501 million won (roughly $345,000) in 76 transfers.

After he received the money, he would send it along to the “higher ups” as cash or vouchers, earning up to 150,000 to 200,000 won a day (roughly $103 to $138) for his efforts.

The Goyang branch of the Uijeongbu District Court gave the sentence in July. “A” appealed, but the appeal was rejected in October, making the sentence final.

“A” was convicted under Article 10, paragraph 4, item 1 of the Virtual Asset User Protection Act, which came into force in July 2024. This section specifically bans fraud and trickery in dealings linked to digital assets. The court treated this as A’s most serious crime. He was also convicted of fraud and of hiding criminal proceeds. 

“A” admitted to laundering but claimed that he could not be found guilty for it under the crypto law because he did not know the details of the scam. The judges disagreed. 

The court found that not only did he know the money came from fraud, but that he was also aware that his laundering was key to the scheme. The court also said that being only a launderer did not make him any less responsible. 

The Goyang verdict is the first that has been handed down under the Virtual Asset User Protection Act without first being referred by either the FSS or FSC.

Has the Virtual Asset User Protection Act been used for a conviction before? 

The first conviction under the Virtual Asset User Protection Act came on February 4, 2026. The Seoul Southern District Court sentenced Jong-hwan Lee, head of a crypto asset management firm, to three years in prison for wash-trading the ACE token. 

Lee was also fined and required to pay 500 million won (about $344,000). In addition to that, the court ordered him to give up about 846 million won (about $583,000). 

A former employee, Min-cheol Kang, on the other hand, was given a two-year prison term that was suspended for three years, so he did not serve any prison time.

The FSC and FSS first approached the case as one of market manipulation, but they later sent it to prosecutors on an emergency “fast track.”

The court dropped the charges against Lee that were tied to about 7.1 billion won (roughly $4.9 million) because the evidence was weak. 

Prosecutors have since appealed the decision, hoping to force Lee to hand that money over.

Meanwhile, the FSC and FSS had reportedly finished roughly 40 investigations and referred more than 30 to prosecutors, naming 25 suspects. On average, each case resulted in gains near 1.4 billion won (roughly $960,000) per case. Most of them were short-term manipulation plays.

Korean police are currently directing their efforts towards breaking up fake-coin and crypto-laundering operations across the country.

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FAQs

What is South Korea's Virtual Asset User Protection Act?

It is a law that took effect on July 19, 2024 to protect crypto users and penalize unfair trading, including manipulation and fraudulent schemes, with provisions that can carry prison terms and fines tied to illicit gains.

How much did the fake-coin scam steal, and from how many people?

The ring took just over 501 million won (about $345,000) from 14 victims across 76 transfers between late December 2024 and February 2025, according to Digital Asset's report on the verdict.

What happened in the law's first case?

On February 4, 2026, the Seoul Southern District Court sentenced crypto firm head Jong-hwan Lee to three years for wash-trading the ACE token, with a 500 million won fine, while accomplice Min-cheol Kang received a two-year term suspended for three; prosecutors later appealed to secure a forfeiture order.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

Hannah Collymore

Hannah is a writer and editor with nearly a decade of blog writing and event reporting experience in the crypto space. At Cryptopolitan, Hannah contributes to the news page, reporting and analyzing the latest developments in DeFi, RWA, crypto regulation, AI and frontier tech industries. She graduated from Arcadia university with a degree in Business Administration.

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