Prosecutors in South Korea have been dealt a blow in their efforts to shut down kimchi token cryptocurrency traders – with 14 suspects cleared of any wrongdoing.
Officials charged 16 people with illegally transferring $3.2 billion in assets, including cryptocurrencies, fiat currencies and commodities.
Newsis reported that two of the group were found guilty of minor crimes. The court sentenced one of them to 12 months in prison. The court sentenced the other to six months in prison.
South Korean prosecutors are seeking a second trial
The Seoul Central District Court acquitted 14 individuals. The group includes an individual prosecutor suspected of masterminding the operation.
Prosecutors are trying to go after cryptocurrency traders they suspect of exploiting cryptocurrency exchange rates to the tune of about $6.5 billion.
The district court dismissed the prosecution's case. The court stated that the case was based largely on previous Supreme Court rulings, rather than legal acts.
But the Public Prosecution said it was “not satisfied” with the court’s ruling, and had already filed an appeal.
The case will now move to the Supreme Court, with prosecutors confident of getting a more favorable ruling.
What is premium kimchi?
The kimchi premium is a phenomenon that sees Bitcoin (BTC) and altcoins trading on South Korean exchanges at much higher prices than international platforms.
This phenomenon occurs frequently when demand rises in South Korea's retail investment market.
Many traders have tried to exploit this. They usually buy coins from foreign over-the-counter sellers. They then effectively “offload” these coins onto local platforms.
During the 2017 uptrend, the premium peaked at around 55%, before bouncing back near the 20% mark during the 2020-2021 uptrend.
While this type of trading may be unethical, South Korea's legal community is divided on the question of whether it actually violates national law.
Prosecutors accused the group of making such deals worth more than $3 billion “between April 2021 and August 2022.”
Prosecutors told the court that the group tried to hide its activities by using a network of shell companies and processing “false commercial payments.”
However, the court ruled that it is difficult to prove any wrongdoing by the accused beyond a reasonable doubt.
The presiding judge also ruled that Supreme Court precedents did not address the fundamental issues at hand.
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The Supreme Court rulings instead focused on the guilt and wrongdoing of individuals — rather than the thorny issue of the circulation of premium kimchi, the judge said.
A slew of new laws relating to cryptocurrencies are set to come into effect on July 19 this year, setting out new penalties for crimes related to cryptocurrency market manipulation.
