Key Factor Distinguishing Prison Sentence vs. Probation in Kesherest Deposit Incident?

[Asia Economy Reporter Ji Yeon-jin] In 2018, when the first cryptocurrency investment boom occurred, investors who did not return coins mistakenly sent by a virtual exchange were sentenced to different prison terms, drawing attention. The prosecution charged them differently based on whether the mistakenly deposited coins were cashed out; one side received a prison sentence, while the other was given a suspended sentence.

According to the judgment obtained by this outlet on the 27th, the virtual asset exchange Cashierest experienced an incident on April 20, 2018, where investors requested cryptocurrency withdrawals, but more than five times the requested amount was withdrawn. For example, if an investor requested to withdraw 1 Bitcoin, 5 Bitcoins were deposited into the investor's wallet. Upon realizing this, Cashierest temporarily suspended the cryptocurrency withdrawal function and posted a notice stating that if the coins were not returned, civil and criminal liability would be pursued.

On that day, investor A requested to withdraw 474,742 NPXS (Pundi X) tokens he held, but received 2,372,360 tokens, five times the amount. A disposed of these coins to purchase other cryptocurrencies. A did not stop there. Having experienced the cryptocurrency wallet deposit and withdrawal system error at Cashierest, ten days later on April 30, A deposited 50,000 KRW into the cryptocurrency wallet but applied for approval as if 50 million KRW had been deposited, and actually received 50 million KRW. A used the mistakenly deposited funds to buy Bitcoin and Ethereum cryptocurrencies, then transferred them to another virtual exchange wallet under his name and disposed of them.

The prosecution indicted A on charges of embezzling 11.76 million KRW from the disposed NPXS tokens deposited five times more than requested and 49.95 million KRW from the inflated deposit amount. The Seoul Central District Prosecutors' Office sentenced A to eight months in prison in 2020.

Investor B also requested to transfer 2.75 million NPXS tokens to another virtual asset exchange wallet on the day of the Cashierest mistaken deposit incident, but 13.75 million tokens, five times the amount, were deposited. Cashierest demanded a return on April 26, but as the price rose, they claimed they would return the amount corresponding to the price at the time of transfer or return it excluding some interest, and did not return all the excess transferred coins.

The Chungju District Court stated, "The defendant committed breach of trust by refusing to return the mistakenly paid virtual currency without any particular reason, and the value of the virtual currency the defendant refused to return is not insignificant," sentencing B to four months in prison. However, considering it a minor case of simply refusing to return the coins, the court suspended the sentence for two years.

In the virtual industry, it is pointed out that such financial accidents can still occur. Current virtual business regulations only check whether virtual asset operators registered under the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transactions Act) comply with anti-money laundering measures, and there are no regulations to prepare for financial accidents. Professor Hong Ki-hoon of Hongik University's Department of Business Administration emphasized, "As seen in the Kakao outage case, IT companies do not invest in systems, and most virtual exchanges are at a mom-and-pop shop level. Since the virtual market atmosphere accepts accidents as natural, protection measures should be established through industry-specific laws."

This content was produced with the assistance of AI translation services.