Prosecutors have additionally indicted a woman in her 30s, identified as Lee, who is on trial for operating an illegal cryptocurrency-based gambling site with stakes amounting to 2 trillion won. Lee is also accused of falsely reporting to the police that 1,476 Bitcoins (worth approximately 210 billion won) she had siphoned off to an overseas cryptocurrency exchange were stolen.

According to the legal community on the 8th, the Gwangju District Prosecutors’ Office’s Public Prosecution Division (Chief Prosecutor Yoon Na-ra) recently indicted Lee, the mastermind behind the illegal gambling site worth 2 trillion won operated overseas, on charges of gambling operation, concealment of criminal proceeds, and false accusation without detention. Previously, the Gwangju District Prosecutors’ Office executed a search and seizure warrant at Lee’s residence in May last year.

From April 2018 to August 2021, Lee operated a gambling site based on Bitcoin, receiving 24,613 Bitcoins from Korean users and others in Thailand. The site operated by awarding points based on the results of bets on Bitcoin price fluctuations.

In 2022, while investigating the case, the Gwangju Police Agency attempted to seize 1,798 Bitcoins, the criminal proceeds of Lee, but only managed to seize 320 Bitcoins as she had already siphoned off 1,476 Bitcoins.

Lee testified to the prosecutors that the police had stolen the 1,476 Bitcoins from her digital wallet, but based on her testimony, the prosecutors executed a search and seizure warrant at the Gwangju Police Agency’s Information Equipment Operation Department in April last year, but found no evidence that the police had stolen the Bitcoins. Consequently, the prosecutors additionally indicted Lee on charges of false accusation.

In February last year, Lee was indicted at the Gwangju District Court on charges of opening a gambling space and violating the Act on Regulation and Punishment of Concealment of Criminal Proceeds, among others, and was sentenced to five years in prison and a fine of over 60.8 billion won in the first trial. However, in the second trial, the sentence was significantly reduced to two years and six months in prison and a fine of 1.52 billion won. The appellate court ruled that there was no evidence that Lee was involved in the disappearance of the Bitcoins and decided not to confiscate the 1,476 missing Bitcoins.

Lee is currently responding with a luxurious legal team, having hired two large law firms. Her case is currently under review by the Supreme Court’s second division (Presiding Judge Kwon Young-jun).

As in Lee’s case, the procedure for investigative agencies to seize cryptocurrencies is becoming increasingly difficult. This is because cryptocurrencies can be easily concealed in overseas exchanges or personal hard disks (USBs). Even when prosecutors and police send cooperation letters to overseas private exchanges to track criminals’ criminal proceeds, many do not respond to investigations, making forced investigations difficult.

Cryptocurrency-related crimes are rapidly increasing every year. According to the National Police Agency, the number of cryptocurrency-related criminals increased by 241.8% from 289 in 2019 to 988 in 2023. Recently, as cryptocurrency prices have been fluctuating sharply, related crimes are increasing again, but criminals are concealing their criminal proceeds by siphoning them off to overseas private exchanges or under borrowed names, making it difficult for investigative authorities to seize them.

As the investigative authorities have yet to recover the Bitcoins concealed by Lee, cryptocurrency prices are rising sharply. The price of Bitcoin, which was in the $3,000 range per coin in April 2018 when Lee committed the crime, surpassed $100,000 last year, soaring more than 20 times in six years.

The legal community advises caution as cryptocurrency prices rise, related crimes also increase. Jang Sung-hoon, a former chief prosecutor and representative lawyer of Bichek, said, “Whenever cryptocurrency prices rise, there is a recurring trend of committing crimes using related issues,” and “Recently, crimes targeting retired middle-aged people using cryptocurrencies by the 20s and 30s are increasing.”

Kwon Yong-hoon, reporter fact@hankyung.com