South Korean Court Acquits Haru Invest CEO of $650 Million Crypto Fraud Charges

A South Korean court has acquitted Lee Hyung-soo, CEO of crypto investment firm Haru Invest, of criminal fraud charges tied to the alleged loss of $650 million in investor funds. The ruling comes nearly a year after Haru halted user withdrawals and shuttered operations, triggering a criminal probe and investor outrage.

The Seoul Southern District Court ruled on Tuesday that while Lee’s management showed significant negligence, his actions did not meet the legal definition of fraud under South Korean criminal law. The court determined that Haru’s suspension of withdrawals in June 2023 was largely driven by market fallout from the FTX collapse, which sparked widespread liquidity issues across the crypto sector.

Prosecutors had originally accused Haru of defrauding 16,000 investors of approximately 1.39 trillion Korean won (around $1.02 billion). The indictment was later narrowed to 880.5 billion won ($650 million) from about 6,000 investors. Authorities claimed the company lured users with promises of full principal returns and annual interest rates as high as 25%. Prosecutors sought a 23-year prison sentence for Lee.

However, the court supported the defense's argument that Haru operated a legitimate business with real profits, distinguishing it from outright scams that intentionally deceive investors from the outset.

Also acquitted were Park and Song, co-CEOs of Blockcrafters, Haru’s parent company. However, Haru COO Kang was found guilty of embezzlement and sentenced to two years in prison, though he was cleared of fraud.

The high-profile case drew even more public attention after an incident during Lee's court appearance last August, when he was stabbed in the neck by a man claiming to have lost 100 BTC with Haru. Lee survived the attack, and the assailant received a five-year prison sentence in April.

Importantly, the court emphasized that this ruling applies only to the criminal charges. Civil liability remains unresolved, and Lee has said he is working to recover investor losses through Haru’s ongoing bankruptcy proceedings.