The Seoul Southern District Court has delivered a landmark ruling, sentencing cryptocurrency CEO Lee Jong-hwan to three years in prison for manipulating the price of ACE Token. This marks the first prison sentence issued under South Korea's new Virtual Asset User Protection Act, signaling a significant shift toward stricter enforcement against market misconduct in the digital asset sector.
The court found that Lee used an automated trading program to execute wash trades, artificially inflating the trading volume and price of ACE Token. The program created dummy buy orders, forming a misleading buy wall that distorted normal market activity and price discovery. Investigators determined that the surge in daily trading volume was almost entirely attributable to his account, creating an illusion of strong demand.
In addition to the prison term, the court imposed a fine and ordered the forfeiture of criminal proceeds. While prosecutors claimed larger illegal gains, the court reduced the penalty after reviewing transaction data and identifying gaps in the prosecution's calculations. The panel ruled that the manipulation of ACE Token met the legal threshold for criminal punishment under the new law.
Legal experts anticipate this judgment will establish a clear legal standard prohibiting artificial volume generation and may reshape compliance strategies across local crypto platforms. The ruling has also revived discussions about previous cases that lacked this legal framework, suggesting earlier acquittals might have been decided differently under the current stricter rules.
This enforcement action coincides with South Korea's continued regulatory development. Lawmakers are preparing a second legislative package aimed at strengthening oversight of stablecoins and token offerings, with the explicit goal of preventing schemes similar to the ACE Token manipulation case. Regulators expect further court actions as more investigations conclude.
