South Korean authorities recently conducted a raid on the headquarters of popular cryptocurrency exchange Bithumb. The investigation was launched to look into allegations that the company’s former CEO misused corporate funds to purchase a luxury apartment. The Seoul Southern District Prosecutors’ Office carried out the search at Bithumb’s Yeoksam-dong offices, focusing on claims that the exchange provided a 3 billion won lease deposit to its former CEO, Kim Dae-sik, who currently serves as an advisor.
It is suspected that Kim used a portion of these funds to acquire a personal residence in Seoul’s Seongsu-dong district. This investigation comes at a critical time for Bithumb as the company has been gearing up for an initial public offering (IPO). CEO Lee Jae-won has reiterated the company’s intention to list on the stock market in 2025 and has implemented structural changes to mitigate legal risks associated with key shareholders.
The Financial Supervisory Service (FSS), South Korea’s financial regulator, had previously looked into the case before handing it over to prosecutors. A spokesperson for Bithumb confirmed that Kim had taken a loan from an external lender following the FSS investigation and subsequently repaid the funds. Despite this repayment, prosecutors are now scrutinizing whether the initial transaction breached financial regulations or corporate governance rules. This incident has prompted a closer examination of Bithumb’s internal financial management and has put the spotlight on the country’s cryptocurrency sector for potential misconduct.
Additionally, there have been separate allegations against Bithumb and rival exchange Upbit regarding token listings. It has been reported that these exchanges facilitated listings through intermediaries who allegedly charged projects substantial fees. Some projects purportedly paid between $2 million and $10 million to secure listings on the platforms. Claims also suggest that certain intermediaries had connections to Upbit shareholders and market makers, with fees ranging from 3% to 5% of token supplies.
Upbit has refuted these allegations and has requested proof from the researcher who made the claims. They have asked for a list of projects that allegedly paid brokerage fees, emphasizing the need for evidence to support these accusations.
As the investigation unfolds and allegations surface, the cryptocurrency community in South Korea remains watchful of developments within Bithumb and the broader governance and financial practices of cryptocurrency exchanges. The industry continues to face regulatory scrutiny, and companies are under pressure to uphold transparency and compliance to maintain trust among investors and regulators.