He Promised High Returns, Faced a Knife Attack, Then Walked Free: Haru CEO Not Guilty of Fraud — What About the Victims?

Haru Invest CEO Cleared of Fraud Amid Multi-Million Dollar Collapse

A South Korean court has ruled that Lee Hyung-soo, CEO of the troubled crypto platform Haru Invest, is not guilty of fraud charges linked to the company’s sudden shutdown and substantial investor losses in 2023.

The decision comes after prosecutors demanded a harsh 23-year prison sentence, accusing Lee of orchestrating a large-scale fraud operation.

How Did Haru’s Collapse Happen Without Criminal Fraud?

The Seoul Southern District Court acknowledged the severe financial harm suffered by investors but found no criminal intent behind Lee’s actions.

Lee Hyung-soo, CEO of Haru Invest

The court pointed to external shocks, notably the FTX collapse, as major factors triggering Haru’s liquidity crunch.

Haru’s business, the court said, had a legitimate profit model, setting it apart from typical Ponzi schemes.

Despite admitting “management negligence,” the court concluded this did not amount to deception punishable under criminal law.

It noted,

“It is difficult to deny the reason for the negligence of management, but it is difficult to determine that it corresponds to deception, which is subject to punishment under criminal law.”

What Were the Allegations and Financial Impact?

Initially, prosecutors accused Haru Invest of stealing 1.39 trillion won ($1.02 billion) from roughly 16,000 investors.

Later indictments lowered the figures to 880.5 billion won ($650 million) involving around 6,000 investors.

The company had promised unusually high returns—up to 25% annually—which drew significant investor interest before withdrawals were halted abruptly in June 2023 and its office suddenly closed.

Violent Backlash Amid Legal Battle

During Lee’s court proceedings in August 2023, he survived a stabbing by a man who claimed to have lost 100 BTC through Haru.

The assailant received a five-year prison sentence earlier this year, highlighting the intense emotions stirred by the platform’s collapse.

What About Other Executives and Ongoing Responsibilities?

The court also acquitted Park and Song, co-CEOs of Haru’s parent company Blockcrafters, of fraud.

Kang, the company’s chief operating officer, was found not guilty of fraud but convicted of embezzlement, receiving a two-year prison sentence with probation and community service.

While the ruling clears Lee and others of criminal charges, it does not absolve them of civil responsibility to compensate victims.

Lee has stated he is pursuing damage recovery through the company’s bankruptcy proceedings.

Is This the End of South Korea’s Yield Platform Crisis?

The verdict leaves open wider questions about investor protection and the fate of South Korea’s high-yield crypto platforms.

Although Lee avoids jail time, the incident has exposed significant risks and regulatory gaps in this sector, prompting calls for greater oversight and clearer safeguards for retail investors.