CEO of South Koreas V Global, a $2 billion crypto-pyramid scheme, gets 25 years in prison

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Lee Byung-gul, the chief executive of bankrupt cryptocurrency exchange V Global in South Korea, will serve 25 years in prison after his sentence was upheld by Korea’s Supreme Court on Friday. The court upheld an appeals court ruling against the CEO for operating a pyramid scheme between 2020 and 2021 that defrauded thousands of investors, local media reported.

See Related Article: Sam Bankman-Fried Pleads Not Guilty to Fraud Charges in FTX Exchange Collapse

Fast facts

Three other unnamed V Global executives had their prison sentences of four to 14 years upheld by the Supreme Court on the same day, according to the Yonhap news agency.

A spokeswoman for the Supreme Court said the full names of those convicted had been redacted in sentencing documents provided to authorized local media, citing the protection of personal information. Forkast News previously reported Lees’ full name after he was named in the lower court sentencing.

The trial court had decided that the proceeds of crime from the pyramid scheme would not be confiscated, indicating the difficulty of specifying the exact amount of money raised by V Global. The Supreme Court upheld that decision, Newsis reported. The Supreme Court spokeswoman declined to comment when contacted by Forkast News.

V Global defrauded around 50,000 investors of 2.8 trillion Korean won between July 2020 and April 2021 (now equivalent to US$2.26 billion), according to the court ruling reported by local media.

V Global has promised 300% return on investment in its self-issued token V Cash. The exchange required new members to create accounts with a deposit of 6 million won ($4,860 USD) offering a guaranteed return of 18 million won. The V Cash token became worthless when the exchange was closed in September 2021

The exchange also reportedly promised users 1.2 million won in commission if they successfully refer another investor. Some of the money was returned to users, but those funds were taken from new users’ deposits, the usual method in a pyramid scheme, the court found.

In December, seven other V Global executives were convicted of pyramid scheme conspiracy and sentenced to three to eight years in a district court, according to local publication The Economist. They are currently appealing the conviction, Yonhap reported.

V Global’s convictions come as South Korean prosecutors attempt to apprehend Terraform Labs Pte. co-founder and South Korean national Kwon Do-hyung on charges of fraud and violation of capital markets law. Stablecoin and crypto project Kwons Terra-Luna collapsed in May last year, blowing billions of dollars and setting off a chain of failed dominoes in the industry. Do Kwon lives in Serbia and has denied the charges against him.

In a separate case involving a stock exchange crash, Sam Bankman-Fried, the founder and former CEO of Bahamas-based trading platform FTX that failed in November, faces eight counts including fraud. electronics and a conspiracy to launder money. Lawyers told Forkast that if convicted, he could face decades in prison. Bankman-Fried pleaded not guilty to all charges in US court.

See related article: Why is it harder to stop Terra-Luna founder Do Kwon than FTX Sam Bankman-Fried?

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