South Korean prosecutors request arrest warrant for Bithumb owner: Report

January 25, 2023 Coin Telegraph

Bithumb

One of the country’s largest crypto exchanges has fallen under investigators’ scrutiny over allegations of embezzlement by company executives.

According to local news outlet Infomax, South Korean prosecutors requested an arrest warrant on Jan. 25 for Kang Jong-Hyun, chairman and owner of cryptocurrency exchange Bithumb. Kang is wanted on allegations of embezzlement related to his activities at the exchange.

The same day, the Financial Investigation 2nd Division of the Seoul Southern District Prosecutor’s Office sentenced Kang and two Bithumb executives on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. The executives were also charged with conducting fraudulent illegal transactions under the Capital Markets Act.

*One of the few public photos of Kang Jong-Hyun. Source: Korea Post English*

Cointelegraph previously reported on Jan. 10 that Bithumb was placed under a “special tax investigation” by the country’s National Tax Service. Simultaneous to the incident, Kang is under investigation over his role in allegedly manipulating the stock prices of Bithumb affiliates Inbiogen and Bucket Studio through the issuance of convertible bonds. Vidente is currently the largest shareholder of Bithumb, with a 34.2% stake.

On Dec. 30, 2022, Bithumb’s largest shareholder, Park Mo, was found dead in front of his own home following investigations into his alleged role in embezzling funds from Bithumb-related companies. It is suspected that Mo may have taken his own life due to the nature of the criminal allegations brought against him.

Subsequent to the development, Lee Jung-Hoon, former chairman of Bithumb, was found not guilty of a $70 million fraud charge regarding his activities at Bithumb. The exchange is one of South Korea's largest, with a 24-hour trade volume of $467 million.

Bithumb ordered to pay outage damages to investors by South Korean court

January 16, 2023 Coin Telegraph

Asia

A ruling from local courts has Bithumb liable to pay just over $200,000 in damages to the 132 investors which filed against the cryptocurrency exchange.

The ongoing saga of the South Korean cryptocurrency exchange Bithumb continues, this time with ruling from local courts.

On Jan. 13 the South Korean Supreme Court finalized its ruling that the exchange must pay damages to investors over a 1.5-hour service outage on Nov. 12, 2017. According to a local news source, the damages are equivalent to $202, 400 - or 251.4 million in the regional currency won.

Initially, a district ruled against the investors, though it was later overturned. The finalized ruling from the Supreme Court ordered damages to be paid ranging from as little as $6 to around $6,400 to the 132 investors involved.

The court’s final ruling stated that:

"The burden or the cost of technological failures should be shouldered by the service operator, not [the] service users who pay commission for the service."

Bithumb is the country’s largest cryptocurrency exchange. The temporary outage came after the average amount of orders per hour suddenly doubled and bottled-necked transaction flows

Investors who were seeking compensation claimed that such as Bitcoin Cash (BCH) and Ethereum Classic (ETC) had major falls during the outage.

Prior to this ruling, Bithumb has been under tight watch from local authorities. After investigations on the former chair of the exchange and the sudden death of one of the largest shareholders after embezzlement claims, Bithumb is now being probed by regulators.

The investigation is a “special tax investigation” being conducted by the country’s National Tax Service (NTS). Authorities are exploring possibilities of tax evasion and raided Bithumb headquarters on Jan. 10.

Regulators in South Korea appear to be cracking down on the local crypto scene. Back in November of 2022, the country began investigations on cryptocurrency exchanges for listing native tokens.

After the FTX scandal, the South Korean city of Busan announced that it is dropping global crypto exchanges from its plans of onboarding third-party digital exchanges.

Korean Court Orders Crypto Exchange to Pay Customers Suffering From Service Outage

January 16, 2023 Bitcoin.com

Executive Linked to Crypto Exchange Bithumb Found Dead Outside His Home: Report

January 4, 2023 Bitcoin.com

Bithumb former chair Lee Jung-Hoon acquitted in the first instance

January 3, 2023 Coin Telegraph

Bithumb

The former chair was under allegations of $70 million in fraud charges which were said to have occurred during the acquisition of Bithumb.

Lee Jung-hoon, the former chair of the South Korean cryptocurrency exchange Bithumb, was found not guilty on Jan. 3 by the 34th Division of the Criminal Agreement of the Seoul Central District Court.

Jung-Hoon was on trial under accusations of violating the Act on the Aggravated Punishment Of Specific Economic Crimes due to fraud.

The case has been ongoing since October 2018, when the former chairman allegedly defrauded 100 billion won ($70 million) during negotiations for the acquisition of Bithumb from Kim Byung-gun, chairman of the cosmetic surgery company BK Group.

Jung-hoon could’ve faced an 8-year sentence had he been found guilty. According to the local press, in its official response to the ruling, Bithumb said it respects the court’s decision.

The exchange also clarified that it is under “professional managers” and the former chairman is not involved in current operations.

Almost a week prior to the ruling, on Dec. 30 Bithumb’s largest shareholder executive Park Mo was found dead after he received allegations of embezzlement and manipulation of stock prices.

These developments followed a decision by Singaporean courts back in Aug. 2022, which found Byung-gun guilty of selling BXA tokens without the consent of Jung-hoon.

The ruling ordered him to return all proceeds from the sale of BXA back to the Singapore-based group BTHMB.

Later in October 2022, Jung-hoon failed to attend a parliamentary hearing during the Terra ecosystem turmoil, citing a mental health disorder.

Bithumb was one of the companies raided by South Korean authorities in the aftermath of the Terra Luna collapse.

After the collapse, exchanges in South Korea created an emergency system as a preventative measure in case of a feature Terra-style incident. To ensure compliance with local regulations, all local exchanges must now list tokens based on the same guidelines.

South Korean Crypto Exchanges Delist WEMIX — Token Price Plunges by Nearly 70%

November 25, 2022 Bitcoin.com

WEMIX token plunges 70% after it’s delisted by Korean exchanges

November 25, 2022 Coin Telegraph

Bithumb

DAXA claimed that the circulating number of WEMIX exceeds what has been disclosed by Wemix, much to the chagrin of the issuers.

South Korea’s largest crypto exchanges have announced they will delist WEMIX (WEMIX) — the native token of gaming company Wemade’s blockchain platform Wemix — alleging the firm provided “false information” in response to an investment warning it was issued.

Bithumb, Upbeat, Coinone, Korbit and Gopax — which are part of a collective called the Digital Asset eXchange Alliance (DAXA) — announced on Nov. 24 that they would terminate contract support for WEMIX, with trading set to end on Dec. 8.

In the investment warning issued Oct. 27, DAXA alleged that there was considerably more WEMIX in circulation than Wemix had disclosed, and Wemix had pledged to work with DAXA to alleviate these concerns.

After news of the decision to delist broke, WEMIX Communication released a statement claiming it had sincerely responded to requests and concerns raised by DAXA and corrected a number of issues where they believe the circulating supply had been overstated the group, adding:

“The WEMIX team does not acknowledge or agree with the unreasonable decision made by the Digital Asset eXchange Alliance (DAXA)... It is crucial to note that the Foundation has not circulated a single WEMIX more than what we have officially disclosed thus far.”

The price of WEMIX plummeted following the news, and at the time of writing is down 70.8% with a current price of $0.476.

The CEO of Wemade Henry Chang has reportedly invested his monthly salary into the WEMIX token eight times, including purchasing 18,928 WEMIX Classic with October salary this year.

Wemade is best known for its hit franchise The Legend of Mir which peaked at over 200 million sign ups and includes one of the world’s most popular blockchain games, Mir 4. It announced on Nov. 2 that it had raised $46 million from Microsoft, and asset management firms Kiwoom Securities and Shinhan Asset Management. Chang said at the time:

“Wemade and Wemix will continue to exert efforts to attract more capital and actively invest to build the global digital economy platform.”

Wemade also announced a plan to release a new economy platform which combines non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs).

While South Korea is one of the biggest gaming markets and blockchain adopters in the world, the country has banned play-to-earn (P2E) blockchain games.

Since being elected on Mar. 10 in a tight race, crypto-friendly President Yoon Suk-yeol has hinted that the ban could be lifted and is looking to grow the virtual asset market by overhauling “regulations that are far from reality and unreasonable.”

Bithumb ex-chairman could face 8 years prison over alleged $70M fraud

October 26, 2022 Coin Telegraph

Bithumb

The sentencing hearing is set for Dec. 20 and could see the former chairman of South Korean crypto exchange Bithumb behind bars for a maximum of eight years if found guilty.

The former chairman of the South Korean cryptocurrency exchange Bithumb, Lee Jung-hoon, could face a possible maximum sentence of eight years in prison if found guilty on charges related to an alleged fraud worth $70 million.

Local prosecutors asked the Seoul District Court for the sentence on Oct. 25, with the sentencing hearing will be held on Dec. 20 according to a report from Yonhap News Agency.

It’s alleged that Jung-hoon defrauded $100 billion won or $70 million from Kim Byung Gun, chairman of the cosmetic surgery company BK Group in October 2018 during negotiations for Gun to purchase the Bithumb exchange.

Gun alleges he paid $70 million to Jung-hoon as a “down payment” towards buying the exchange on the condition that it lists a token called BXA created by the Blockchain Exchange Allicance which Gun helped to form.

The proceeds from the token listing would’ve allegedly gone towards helping pay for the acquisition, but Bithumb never listed it and the deal fell apart.

"The structure of this case is a typical stock sale contract," Jung-hoon’s lawyer reportedly said as a defense, adding that it was carried out faithfully according to typical procedures for such a contract.

Jung-hoon said in his final statement to the court that he was “very sorry for making it difficult for employees and causing social pressure."

Earlier this month Jung-hoon failed to attend a parliamentary hearing on Oct. 6 regarding the $40 billion wipeout of the Terra ecosystem citing a panic disorder as the reason for his absence.

Singapore court rules in favor of Bithumb founder in acquisition case

August 31, 2022 Coin Telegraph

Bithumb

The decision on the civil lawsuit might affect a trial court in South Korea.

The court drama behind the acquisition of South Korean crypto exchange Bithumb has been going on for several years, but in an unexpected development, a Singapore court has made a ruling against Kim Byung-gun, who has originally accused the owner of Bithumb, Lee Jung-hoon, in defrauding him.

According to the South Korean publication Aju Daily, on Aug. 26, after three years of proceedings, a court in Singapore found Kim guilty of selling BXA coins without the permission of his partner Lee and ordered him to return the proceeds gained from the sale of coins to Singapore-based consortium BTHMB.

The decision of this civil case might affect the trial court, that has been held in South Korea. In that case, Kim accused Lee of defrauding him in the process of a jointly planned acquisition of Bithumb.

As his narrative goes, in October 2018, Lee Jung-hoon discussed the purchase and joint management of the Korean exchange with the chairman of BK Group and the founder of a line of cosmetic surgery clinics, Kim Byung-gun. Partners registered the BTHMB consortium to buy out a 50% stake in Bithumb Holdings — Lee reportedly received $100 million upfront as a “contract fee” from Kim, another part of the funds, demanded to close the acquisition, should have come from the sale of BXA coins issued by BTHMB.

Yet the token was never listed and the consortium didn’t take over Bithumb as it failed to pay the balance. Kim filed a complaint against Lee in a Korean court in 2020. But even beforehand, in 2019, Lee accused his ex-partner of selling BXA tokens on his behalf in Singaporean court.

Meanwhile, Bithumb casually continues its operation — in January 2022, it confirmed the development of a nonfungible token exchange that would help it stay competitive with Korbit and Upbit, two other domestic Korean exchanges. In July, the current owner of Bithumb, Koren company Vidente, revealed that it has contacted FTX on the subject of a possible sale of its stake.

Ethereum Classic Climbs 124% in 2 Weeks, Hashrate Spikes, KRW Captures 20% of ETC’s Trade Volume

July 28, 2022 Bitcoin.com

Bithumb

Share this video