A South Korean court has acquitted CEO of Haru Invest Lee Hyung-soo of fraud charges, according to local news reports.

The ruling was issued on June 17, 2025, by the Seoul Southern District Court. The charges were related to Haru’s sudden suspension of user withdrawals in June 2023.

This action reportedly resulted in losses of US$650 million for around 6,000 investors.

Prosecutors claimed that the company misled investors with promises of high returns. They initially estimated losses at US$1.02 billion affecting 16,000 individuals.

These figures were later revised during subsequent indictments.

The court found that Lee’s actions did not meet the legal criteria for deception under criminal law. However, it acknowledged managerial neglect on his part.

It attributed Haru’s withdrawal freeze to a broader liquidity crisis caused by the FTX bankruptcy, indicating that the company operated a legitimate business model.

🔗 Source: The Block

🧠 Food for thought

1️⃣ Crypto exchange collapses often create domino effects across the industry

The court’s ruling that Haru’s withdrawal suspension was “primarily linked to the FTX bankruptcy” highlights a common pattern in cryptocurrency market failures.

When FTX collapsed in November 2022, it triggered a $152 billion market value loss within just three days, with Bitcoin dropping 16% and Ethereum falling 24% 1.

This contagion effect is typical in crypto markets. FTX’s failure directly contributed to the bankruptcy of other firms like BlockFi and Celsius Network that had exposure to the exchange 2.

The Haru case demonstrates how courts are increasingly distinguishing between fraud and business failures caused by industry-wide liquidity crises, recognizing that not all crypto collapses involve criminal intent despite significant investor losses.

The ruling also reflects growing judicial understanding of cryptocurrency market mechanics, where even legitimately operated businesses can fail due to their interconnectedness with larger industry players.

2️⃣ Courts increasingly distinguish between criminal fraud and civil liability in crypto cases