In a significant legal development, the head of Dunamu, the company operating South Korea’s leading Upbit crypto exchange, has been declared not guilty of data manipulation charges by the nation’s Supreme Court.
Dunamu Chairman Song Chi-hyung speaking at an event hosted by Seoul National University in 2021. (Source: Seoul National University/Seoul Kyungjae/YouTube)
Allegations centred around the creation of fake member accounts on Upbit between September and November 2017. Prosecutors claimed that Chairman Song Chi-hyung and a group of executives manipulated order volumes, conducting transactions worth almost $93 million using bogus accounts.
The prosecution argued that the group artificially boosted trading volumes by moving BTC 11,550 among 26,000 wallets. This allegedly generated profits of nearly $114 million during the bear market’s peak.
Earlier, a district court and a branch of the high court had cleared Song and the executives of charges. Despite these decisions, the prosecution persisted, leading to the Supreme Court trial.
All three courts, however, unanimously ruled that the prosecution had used “illegal methods” to obtain evidence. The key issue was the “illegal access” to information from Dunamu’s Amazon-provided cloud accounts. Prosecutors, who had obtained conditional search and seize warrants, were found to have overstepped their authority by accessing remote servers.
The court also dismissed charges against the firm’s Chief Financial Officer and Data Office Director. They were accused of forgery and fraud, but the courts ruled in their favour.
Upbit, once trailing Bithumb, has surged to dominate 80% of South Korea’s crypto market. A pivotal factor in its success was a strategic partnership with neobank K Bank, allowing customers to open wallets and bank accounts online, circumventing the need for physical branch visits as required by South Korean crypto regulations.