South Korean CEO Jailed for ‘Misappropriating’ Partner Firm’s Ethereum Funds

Ethereum South Korea

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023

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A South Korean CEO has been sentenced to five years in prison for “misappropriating” $2.4m worth of Ethereum (ETH) from a partner company.

Per the media outlet Delight, the 43-year-old man, identified only by his surname (Chae), is the head of a “marketing agency” that deals with crypto funds.

A branch of the Seoul Northern District Court heard that the company worked with a telecoms and broadcasting firm that is active in the blockchain space.

The telecoms firm holds a patent for a new form of blockchain-powered mobile communication resource sharing. It launched a “reverse” initial coin offering (ICO) via the marketing company.

The reverse ICO raised some ETH 38,099 from investors, and the funds were held under the management of Chae’s company.

Man ‘Made Dozens of Unauthorized ETH Transfers

But, the court heard, in October 2018, Chae began “arbitrarily” transferring some of these ETH funds to accounts held by another company he owned. He began with a sum of 300 ETH, but eventually transferred “a total of ETH 21,245.99” over the course of “dozens of transactions.”

The prosecution also accused Chae of trading some of the coins for fiat, and transferring them to wallets held in his wife’s name. But the judge rejected these calls.

The judge also rejected the mobile communication company’s appeals for compensation. The judge claimed that in certain instances, it was unrealistic to believe that Chae had acted alone and without the mobile communication company’s knowledge.

Regardless, the judge did find Chae guilty of violating the Act on the Aggravated Punishment of Specific Economic Crimes. This piece of legislation was amended to include crypto clauses back in 2020.

Last year, a court sentenced a fraudster who duped victims out of around $1.7 million worth of Bitcoin (BTC), and ETH to five years in jail. The criminal claimed to have created a blockchain-powered platform for webtoons, web-based cartoon strips that enjoy enormous popularity in South Korea.

And in 2020, police shut down a fraudulent “Ethereum wallet”-themed multi-level marketing-type project. The project’s masterminds raised $44.5 million from around 3,000 victims.