A court in Goyang, South Korea, has sentenced a money launderer to two and a half years in prison for his role in a fake-token investment scam, applying the country's Virtual Asset User Protection Act to what was essentially an ordinary fraud case.

The verdict is notable because prosecutors are now using the law against routine scams without a referral from financial regulators — marking the first conviction handed down under the statute that did not originate from the Financial Services Commission (FSC) or the Financial Supervisory Service (FSS). For a law whose enforcement so far has centered on market-manipulation cases built by those agencies, the ruling shows the statute working as a general anti-fraud tool that investigators can reach for on their own.

What the court decided

According to the ruling, a criminal ring operated a fraudulent investment website and sold tokens that did not exist. Victims were told the tokens were priced cheaply and would pay off once listed on an exchange, although the operators never intended to deliver anything to buyers.

The launderer, identified only as "A," registered as a gift-certificate dealer, which allowed the scammers to use his bank account to receive victim funds. From late December 2024 to February 2025, fourteen victims transferred approximately 501 million won (roughly $345,000) to the account across 76 transactions.

After receiving the money, "A" passed it along to the scheme's "higher ups" in the form of cash or vouchers, earning between 150,000 and 200,000 won per day (roughly $103 to $138) for his efforts.

The Goyang branch of the Uijeongbu District Court imposed the sentence in July. "A" filed an appeal, but it was rejected in October, making the two-and-a-half-year term final.

Fraud conviction under the crypto law

The court convicted "A" under Article 10, paragraph 4, item 1 of the Virtual Asset User Protection Act, which came into force in July 2024 and specifically prohibits fraud and trickery in dealings involving digital assets. Judges treated this as his most serious offense. He was also convicted of fraud and of concealing criminal proceeds. Because the same statute also underpinned Korea's first conviction under the law — the ACE wash-trading case — the Act now has on record both a market-manipulation ruling and a fraud-and-laundering ruling, giving prosecutors one legal instrument whose record spans outright scams as well as trading abuses.

In his defense, "A" admitted to the laundering but argued he could not be found guilty under the crypto law because he was unaware of the scam's details. The judges disagreed, finding that he not only knew the funds came from fraud, but also understood that his laundering was key to the scheme's operation. The court further held that acting merely as a launderer did not make him any less criminally responsible — a framing that extends the law's practical reach beyond a scheme's architects to the people who move its money.

Previous convictions under the Act

The first conviction under the Virtual Asset User Protection Act came on February 4, 2026, when the Seoul Southern District Court sentenced Jong-hwan Lee, head of a crypto asset management firm, to three years in prison for wash-trading the ACE token. Lee was also fined 500 million won (about $344,000) and ordered to forfeit approximately 846 million won (about $583,000).

A former employee, Min-cheol Kang, was given a two-year prison term suspended for three years, meaning he served no jail time.

The FSC and FSS initially approached the Lee case as one of market manipulation before sending it to prosecutors on an emergency "fast track." The court dropped charges against Lee tied to about 7.1 billion won (roughly $4.9 million) because the evidence was weak. Prosecutors have since appealed the decision, hoping to force Lee to hand over that money.

Meanwhile, the FSC and FSS have reportedly finished roughly 40 investigations and referred more than 30 cases to prosecutors, naming 25 suspects. On average, each case involved gains of nearly 1.4 billion won (roughly $960,000), with most constituting short-term manipulation plays. The Goyang verdict sits outside that tally entirely, arriving without any regulator referral.

Korean police are currently directing their efforts toward breaking up fake-coin and crypto-laundering operations across the country. With prosecutors' appeal over the roughly 7.1 billion won dropped in the Lee case still pending, further rulings — some built on regulator referrals and some not — will help set the early boundaries of how widely the statute can be applied.