Korean Court Hands Down 2.5-Year Sentence in Landmark Crypto Laundering Case

A South Korean court has sentenced a man to two and a half years in prison for laundering roughly 501 million won ($345,000) for a fake-coin scam ring, in the first conviction under Korea's Virtual Asset User Protection Act that reached a judge without a prior referral from the FSC or FSS.

The defendant, identified only as "A," received the sentence from the Goyang branch of the Uijeongbu District Court in July. He appealed; the appeal was rejected in October, making the sentence final.

According to the court record, "A" registered as a gift-certificate dealer and handed the scammers a bank account to receive victim funds. From late December 2024 to February 2025, fourteen victims sent him about 501 million won across 76 transfers. He then passed the money to the operation's "higher ups" as cash or vouchers, earning 150,000 to 200,000 won per day — roughly $103 to $138.

What law was he convicted under?

The court convicted him under Article 10, paragraph 4, item 1 of the Virtual Asset User Protection Act, the provision that bans fraud and trickery in digital-asset dealings. Judges treated this as his most serious offense, alongside separate convictions for fraud and hiding criminal proceeds. The act came into force in July 2024.

"A" admitted the laundering but argued the crypto law couldn't apply because he didn't know the details of the scam. The judges rejected that defense outright.

The court found he not only knew the money came from fraud, but understood his laundering was integral to the scheme. It also ruled that acting "only" as a launderer didn't reduce his responsibility.

The jurisdictional point matters. Every earlier conviction under the Virtual Asset User Protection Act began as an FSC or FSS investigation before reaching prosecutors. This one didn't, which effectively widens the pipeline for future crypto-related prosecutions.

Has the law produced convictions before?

Yes. The first came on February 4, 2026, when the Seoul Southern District Court sentenced Jong-hwan Lee, head of a crypto asset management firm, to three years for wash-trading the ACE token. Lee was also fined 500 million won (about $344,000) and ordered to forfeit roughly 846 million won (about $583,000).

His former employee, Min-cheol Kang, received a two-year term suspended for three years, meaning no prison time.

The FSC and FSS initially framed the Lee case as market manipulation, then sent it to prosecutors on an emergency "fast track." The court dropped charges tied to about 7.1 billion won (roughly $4.9 million) for weak evidence; prosecutors have appealed, seeking forfeiture of that amount.

The enforcement picture behind these cases is expanding quickly:

• The FSC and FSS have completed roughly 40 investigations
• More than 30 were referred to prosecutors
• 25 suspects have been named
• Average gains ran near 1.4 billion won (roughly $960,000) per case, mostly short-term manipulation plays

What happens next?

Korean police are now concentrating on dismantling fake-coin and crypto-laundering operations nationwide. With the Goyang precedent showing courts will convict launderers under the Virtual Asset User Protection Act even without a financial-regulator referral, and with Lee's appeal still pending over the 7.1 billion won in dismissed charges, the enforcement window for crypto-linked crime in Korea is clearly still opening.