Two former employees of Coinone, a prominent South Korean cryptocurrency exchange, have been handed prison sentences for their involvement in a bribery scheme aimed at influencing the listing of specific cryptocurrencies on the platform. This scandal, which spanned over two years from 2020, highlighted corruption in the crypto industry.
Jeon, the former head of crypto listing at Coinone, received a four-year prison sentence and was ordered to repay 1.93 billion Korean won (approximately US$1.43 million) in unlawfully acquired profits. He was initially arrested on March 22, 2023, on bribery and breach of trust charges. His accomplice, Kim, who worked alongside Jeon, was sentenced to 42 months in prison and faced a penalty of 883 million won (about US$654,000) for the same charges.
The case also involved two brokers, Koh and Hwang, who were accused of facilitating the bribery scheme. They received sentences of 18 months and 30 months in prison, respectively.
According to Seoul Southern District Court judge Kim Jung-gi, the crime was “a collusion between multiple conspirators, including crypto exchange listing staff, brokers, token issuers, and market-making companies to share profits from issuing new coins and manipulating market prices.” The prosecution had alleged that some of the tokens involved were linked to companies hired to manipulate cryptocurrency prices, including Pica Coin and Puriever.
This scandal sheds light on questionable practices within the cryptocurrency exchange industry. Hwang Suk-jin, a Seoul-based information security and financial crime expert, commented that while some exchanges practice transparency in token listings, many exchange employees engage in such behavior as a common practice.
The Bank of Korea estimated South Korea’s cryptocurrency market value at 19 trillion won (approximately US$14.1 billion) at the end of the previous year, making it one of the largest cryptocurrency markets globally.
Coinone, the affected exchange, has not yet responded to requests for further comments regarding the sentencing. This case serves as a stark reminder of the need for regulatory oversight and transparency within the cryptocurrency industry to maintain trust and integrity in the market.
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