he executives of HaruInvest, a South Korean crypto investment platform, have reportedly been arrested by local prosecutors. Co-CEOs Kim and Lee as well as Chief Business Officer Choi are facing charges related to embezzling over 1 trillion won (approx. $710 million USD) from customers.
Haru Invest Background
Founded in 2020, HaruInvest quickly gained popularity by promoting proprietary algorithmic trading strategies said to guarantee annual returns as high as 12% with "almost zero" risk of losses. This enticed over 16,000 customers to deposit crypto worth an estimated 1 trillion won (over $700M) by mid-2023.
However, in June of that year, the platform abruptly froze all user withdrawals without substantive explanation. HaruInvest claimed a "business error" stemming from a third party, but did not resume normal services or repay investors as promised. This sparked allegations of an intentional scam as deposited funds essentially vanished.
Investigation Uncovers Embezzlement Scheme
A joint police-prosecutorial task force launched an investigation into HaruInvest's suspicious collapse. Through examining financial records and testimony, they discovered the company's leaders did not in fact primarily conduct algorithmic trading as marketed.
Rather, prosecutors allege co-CEOs Kim and Lee along with CBO Choi had embezzled the majority of customer deposits for unauthorized speculative investments and personal profiteering. This directly contradicted previous assurances that algorithms ensured "almost zero" risk of losses.
Executives Face Severe Punishment if Convicted
Based on the evidence uncovered, arrest warrants were issued for Kim, Lee, and Choi on charges of aggregate theft and fraud exceeding 1 trillion won. All three surrendered to authorities and have been formally indicted.
If convicted, each faces a minimum sentence of 5 years imprisonment and up to life in prison under South Korean law. They have also been ordered to repay the full amount allegedly misappropriated. A trial date is yet to be set.
Regulators Act to Restore Trust in Crypto
Regulators praised the investigation's outcome, stressing commitment to safeguarding citizens' digital assets. As crypto adoption increases, robust oversight is deemed necessary to establish confidence against potential scams and deceit.
For newcomers, HaruInvest's misdeeds serve as an example of risks inherent in any platform handling investments. Thorough due diligence of companies' structures and promised returns remains advisable before depositing significant funds.
