Former Bithumb Chairman Lee Jeong-hoon Faces 8-Year Prison Sentence in Appeal

Lee Jeong-hoon, the former chairman of Bithumb, one of South Korea’s primary cryptocurrency exchanges, faces a potential 8-year prison sentence. The Seoul High Court is expected to deliver its verdict in the appeal case on January 18, 2024.

The legal battle revolves around accusations against Lee for his dealings with Kim Byung-gun, chairman of BK Group, in a potential acquisition of Bithumb. The prosecution alleges that Lee duped Kim Byung-gun out of 110 billion won (approximately $70 million) through a fraudulent agreement involving the listing of BXA tokens on the Bithumb exchange.

The prosecution claims that Lee was fully aware of the challenges in listing the BXA token but deliberately withheld this information from Kim. Furthermore, they argue that Lee’s restructuring plan for Bithumb aimed to profit from exchange tokens while evading financial regulations.

Lee’s defense team, however, challenges these allegations. They argue that inconsistencies in Kim’s testimony undermine his credibility. Moreover, they assert that Lee fulfilled all obligations as a seller and extended the payment deadline upon request, only to be unexpectedly sued by Kim.

The outcome of the appeal is critical, not just for Lee Jeong-hoon but also for the broader cryptocurrency industry. It is poised to set a precedent in legal disputes involving crypto exchanges and governance. Additionally, with Bithumb preparing for an IPO on the Kosdaq by 2025, the verdict will significantly influence the exchange’s future and the fate of BXA tokens.

The trial’s decision, expected in January 2024, could lead to a reassessment of governance structures in cryptocurrency exchanges and potentially attract increased regulatory scrutiny. The legal outcome will be a pivotal moment for the industry, potentially reshaping policies and practices in cryptocurrency exchanges.

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Terraform Labs (Luna) Co-Founder Pleads US Court to Dismiss SEC’s Fraud Allegations

The United States Securities and Exchange Commission (SEC) has filed claims of fraud and securities violations against Terraform Labs. Together with the company’s co-founder, Do Kwon, Terraform Labs is vigorously pursuing a dismissal of these charges from a U.S. District Court. The legal representatives for Kwon and Terraform Labs argued in a document that was submitted on October 27 to the United States District Court for the Southern District of New York that the cryptocurrencies Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and mirrored assets (mAssets) are not securities as asserted by the SEC. The document was filed in response to the SEC’s claim that the cryptocurrencies are securities.

They emphasised that there is a lack of evidence to corroborate many of the SEC’s charges, and this was a major point of emphasis for them. The defence team vigorously refuted a particular claim, which said that Kwon and Terraform Labs had clandestinely moved millions of dollars into bank accounts in Switzerland for the purpose of enriching Kwon personally. The dispute centres on a claim that 10,000 Bitcoin were transferred to an account at a Swiss bank, resulting in the subsequent withdrawal of $100,000 from the financial institution. They emphasised, “The SEC knew this allegation was false when it filed this case,” which gave insight on what was seen as disinformation provided by the SEC.

Constant allegations from the SEC

The action that was brought by the SEC in February posited fraudulent behaviour by Kwon and Terraform Labs. This was a significant setback for the once thriving $40 billion Terra ecosystem, which came to an end in May 2022 when the TerraUSD (UST) stablecoin lost its peg to the United States dollar. The complicated legal situation exacerbated an already large decline for renowned bitcoin companies, with Terraform Labs at the forefront of this trend.

The Securities and Exchange Commission (SEC) said that the catastrophic collapse of TerraUSD (UST) and the Luna cryptocurrency was the consequence of unregistered securities sales that were part of a massive scheme that allegedly defrauded investors out of billions of dollars. This allegation contributes to the continuing legal conflict between crypto businesses and regulatory agencies over the basic principles that govern digital assets.

The Dynamics of the Courtroom

Even after a two-year-long investigation, over 20 depositions, and an exchange of more than two million pages of documents and data, Terraform Labs is adamant that the SEC has not shown sufficient proof to support a trial. This is evidenced by the company’s request for summary judgement, which elucidates the company’s opinion that the SEC has failed to do so. Do Kwon, who is being held in custody in Montenegro at the moment, has pleaded with the court to deny the SEC’s request to extradite him so that he may be questioned in the United States on the catastrophic failure of his company’s tokens.

The attorneys stated that extraditing Kwon for the purpose of obtaining testimony would be “impossible,” while vehemently rejecting any chance that would provide the SEC with a similar advantage. While the legal system is in disarray, Terraform Labs and Kwon continue their ardent defence against the claims made by the SEC. Both parties are working hard to clear their names and recover the reputations that have been severely damaged as a result of the allegations made against them in the cryptocurrency industry.

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Crypto Exchange Thodex Founder Sentenced to Over 11,000 Years Amid Fraud Allegations

In a decision by the Anatolian 9th High Criminal Court, Faruk Fatih Özer, the mastermind behind the Turkish cryptocurrency platform Thodex, has been found guilty in a significant fraud case. Alongside Özer, six other individuals were detained, making up a total of 21 individuals implicated in the fraud allegations.

The court’s judgment was severe. Özer, together with his siblings, Güven Özer and Serap Özer, received a staggering sentence of 11,190 years and 6 months imprisonment. The charges that led to this lengthy sentence encompassed “establishing, directing, and participating in a criminal organization,” “engaging in sophisticated fraud,” and “money laundering.”

In addition to this, the court mandated an extra sentence of 6 years, 4 months, and 15 days for each sibling. They were also slapped with a hefty fine of 135 million lira for “committing fraud using digital systems.” In total, the cumulative sentence for each of the Özer siblings stands at 11,196 years, 10 months, and 15 days.

Thodex, which was once a beacon in Turkey’s cryptocurrency landscape, took an unexpected turn in 2021 when it suddenly halted all operations. This abrupt closure left numerous users in a quandary, unable to access their digital assets, which were estimated to be worth around $2 billion.

The situation became murkier when Özer departed Turkey post the shutdown, sparking rumors of a potential exit scam. Despite the swirling allegations, Özer remained steadfast in his denials.

In the courtroom, Özer presented a defense centered on the premise that Thodex was simply a business venture that unfortunately went under. He asserted, “I possess the acumen to oversee any global institution. My capabilities are evident from the enterprise I initiated at a mere age of 22. Had I intended to create a criminal syndicate, my actions would have been far more sophisticated.”

The Anadolu Chief Public Prosecutor’s Office, in its indictment, shed light on the deceptive practices of the Thodex platform. The document revealed that a sum equivalent to 253 million 714 thousand 909 lira in cryptocurrency was moved from three distinct accounts under the control of Özer. Intriguingly, a large chunk of these digital assets found their way to cryptocurrency wallets based in Malta.

The saga took another twist when Özer was captured in Albania on August 30, 2022. Following legal procedures, he was extradited to Turkey by April 20, 2023, and by April 23, he was under detention at the Anadolu Justice Palace.

This case has garnered extensive coverage from global media powerhouses like Cointelegraph and Fortune. Their reports underscore the pivotal nature of the Thodex case in the realm of cryptocurrency and highlight the broader ramifications it holds for the regulation of digital assets and safeguarding investor interests.

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