Bitcoin principal guarantee fraud, Supreme Court ruling overturned... Fraud charges can be established with only implicit awareness.

Source: DecenterKorea Original Title: 'Bitcoin Principal Guarantee' Fraud Acquitted Overturned… Supreme Court Remanded Original Link: https://www.decenter.kr/NewsView/2H1L3MWUU4/GZ03

The Supreme Court ruled that if one recruited investment funds knowing that the Bitcoin investment solicitation, which promised principal protection and high returns, was essentially a 'Ponzi scheme', they cannot escape liability for fraud. This clarifies the standard that in similar fraudulent cases involving virtual assets, which had previously been difficult to prove, 'negligent awareness' alone can be sufficient to recognize the intent to deceive.

The Supreme Court's 1st Division overturned the original ruling that acquitted Mr. Lee, who was indicted on fraud charges, and remanded the case. The Supreme Court found sufficient grounds to believe that Mr. Lee deceived the victims into embezzling investment funds, knowing that Renval Capital was a similar reception company without a substantial profit structure.

Mr. Lee is accused of inducing investments by acting as a recruiter for a U.S. Bitcoin investment company 'Renval Capital' in the Daejeon area, claiming to a victim in January 2019 that “the principal will be settled reflecting the increase in coin prices after 10 months, and even if the price goes down, the principal is 100% guaranteed,” and that “if the company goes public, tokens that can be used in real life will be distributed, and referral bonuses will be given for recruiting additional investors.” Mr. Lee received a total of 46.07 million won in remittances on two occasions, January 18 and 28 of the same year.

However, Renbel Capital was actually a typical Ponzi scheme organization that paid profits to existing investors with the funds of new investors without any real profit-generating structure. In particular, it was investigated that from around December 2018, the operation of the company’s website was suspended and withdrawals of investment funds were also stopped.

The first and second trials stated, “It is difficult to view that Mr. Lee recognized that the company has no substance or the ability to return the principal and profits,” and acquitted him. However, the Supreme Court's judgment was different.

The Supreme Court noted that since Mr. Lee started receiving investments from top-tier investors in March 2018, he had set up an office from April of the same year to recruit about 50 lower-tier investors and manage the funds. Given that he directly operated a structure that used the newly incoming investment funds to pay profits or principal to existing investors, it was stated that he was in a position to fully recognize that the company was a multi-level pyramid-like organization without a substantial profit structure.

Especially since the end of 2018, when withdrawals were completely suspended, Mr. Lee received investment funds by falsely explaining to the victims as if principal guarantees and high returns were possible, without informing them of this situation. The Supreme Court stated, “The defendant sufficiently misled the victim into believing that the return of the investment and the payment of high interest was impossible, at least while being aware of this fact.”