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"Differences with other guilty cryptocurrency exchange cases must be proven"

The trial of Song Chi-hyung, founder of cryptocurrency exchange Upbit and CEO of Dunamu, who was indicted on charges of creating fake accounts and taking 150 billion won ($127.5 million), has begun. The main point of contention during the trial is expected to be the difference between other incidents involving cryptocurrency exchanges, such as Komid, Coinnest and HTScoin, and the Upbit incident. Seoul High Court’s investigative team initiated the first preparation process for trial of three executives at Upbit, who have been referred to trial on fraud charges. The preparation process involves a review of arguments and evidence by prosecutors and attorneys before the trial. Since the defendant does not need to attend the trial, the three executives including Song did not show up at court. #”The quantity of bitcoin plugged in on ID8 and the amount possessed at the time of the transaction must match, or else it counts as a fake entry” The three Upbit executives are accused of manipulating the data after creating an ID named “8” from 2017 September to November. They were prosecuted without detention for luring people into transactions after making it seem as though they deposited 122.1 billion won worth of assets on the account and pushing forward with the transactions. During the first trial, they were found innocent. Officials took the side of Upbit, which argued that the electronic information plugged in the ID8 functioned as a limit on orders. The prosecution continued to emphasize that the numbers plugged in ID8 are fraudulent, arguing that if the account holder did not possess the amount of assets traded during the transaction, then it is a fake entry, and is considered fraud. “The main argument from the facts charged by the prosecution is that Dunamu illicitly sold bitcoin that the company did not own in the first place, and hence it committed fraud,” said the defense counsel in rebuttal. “However, Dunamu owned much more bitcoin than the prosecution is arguing, and the investment amount also exceeds 13 billion won.” The defense counsel argued that the case does not constitute a crime since Dunamu owned much more bitcoin and cash than what was registered on ID8. However, the prosecution went on to argue that the amount Dunamu possessed around the time of transaction is not the main point of contention. The prosecution said the company needs to prove that Dunamu owned the amount corresponding to the transaction, instead of focusing on how much bitcoin Dunamu owned in total. In response, the defense counsel said it is difficult to confirm the amount was in each account at certain times, since it is information from the beginning stages of the company. It said it will submit reverse-estimated data. #“The difference between Upbit’s case and the cases of “Komid, Coinnest and HTScoin” must be explained.” Officials on several occasions inquired of the prosecution and counsel about the difference between the cases, but it still has not heard a definite answer. Officials considered the Upbit incident similar to the HTScoin case. The CEO of HTScoin was sentenced to two and a half years in prison and three years of probation during the first trial last year on charges of manipulating data and fraudulently buying cryptocurrency. “After listening to the opinions of the prosecution and defense counsel, the panel of judges will decide whether it will wait for the Supreme Court’s decision or if it will start the official court hearing for this case,” said officials, requesting a thorough analysis into the difference between the cases on the second preparation process on Nov. 20. Meanwhile, the prosecution said it is considering a modification in the indictment, so that the stolen amount includes other types of cryptocurrency, in addition to the current transaction amount of bitcoin and the commission from the bitcoin sale.

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