A major fraud case that shook South Korea’s cryptocurrency market has sparked controversy as the court granted a temporary release for the perpetrator to recover assets. Bang, the major shareholder of B&S Holdings, was sentenced to 10 years in prison for embezzling cryptocurrency from Haru Invest and Delio. However, the court approved a temporary suspension of his detention for a limited period to facilitate potential asset recovery.
This case is one of the largest cryptocurrency fraud incidents in South Korea, causing massive investor losses. Haru Invest and Delio had operated by accepting and managing billions of KRW worth of cryptocurrency from investors. However, following the collapse of the global crypto exchange FTX, a significant portion of their assets was frozen. During this turmoil, Bang was found to have falsified investment returns and illegally transferred approximately 60 billion KRW in cryptocurrency. Prosecutors indicted Bang on charges of fraud and embezzlement, and the court handed down a 10-year sentence.
On February 14, the Seoul High Court’s 7th Criminal Division (Presiding Judge Lee Jae-kwon) upheld the 10-year prison sentence from the first trial. The court ruled that “Bang was aware of the inevitable investment losses caused by the FTX collapse but deliberately concealed this information and misled investors with false claims.” Investigations also revealed that he had used Traum Infotech, a crypto trading bot development firm, to fabricate false investment profits and embezzle the assets. The court emphasized that Bang’s actions had caused substantial financial damage to investors and significantly undermined market trust, necessitating a harsh penalty.
Despite this, the court acknowledged the necessity of recovering approximately 3.4 trillion KRW worth of frozen assets on FTX and granted Bang a temporary suspension of detention. A court official explained, “Bang must personally complete the Know Your Customer (KYC) verification process with FTX, which could allow for the recovery of some lost assets.” Consequently, Bang was released with conditions, including an electronic ankle monitor and residence restrictions, for the designated period. However, it remains unclear whether he successfully completed the KYC process or retrieved the frozen assets.
Legal experts have expressed skepticism, describing the court’s decision as highly unusual. In large-scale financial fraud cases, it is rare for a convicted individual to be temporarily released under such circumstances. One legal expert noted, “Detention suspension is granted under specific conditions to ensure the defendant’s right to defense, but for victims, this decision may be difficult to accept.”
Victims have strongly opposed the court’s ruling. One investor remarked, “The prison sentence itself is not the issue—what matters is whether we can recover the cryptocurrency we entrusted.” Another investor added, “We have already been deceived once. We cannot afford to be fooled again. The court was too lenient,” hinting at possible legal action. Many victims have expressed concerns that despite the court’s restrictions, Bang may attempt to conceal assets again or evade compensating the affected investors. As a result, they plan to closely monitor whether he successfully recovers the FTX assets and how those funds will be distributed.
Currently, there is no official confirmation regarding Bang’s re-detention or whether he completed the KYC process. It remains uncertain whether he retrieved the frozen FTX assets or if any recovery process has commenced. The court has suggested that if asset recovery is delayed even after KYC verification, additional legal measures may be considered. However, investors remain skeptical about whether they will ever receive compensation.
With uncertainty surrounding Bang’s actions and the fate of the recovered assets, the South Korean cryptocurrency community continues to closely watch whether he will fulfill his obligations or if this case will lead to further controversy.
