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South Korean Prosecutors Fail in Bid to Jail Ex Bithumb Boss

Tim Alper
Last updated: | 2 min read
Source: Andriano_cz/Adobe

South Korean prosecutors have been thwarted in their efforts to send the former head of the crypto exchange Bithumb to prison for eight years.

Per TVChosun, a branch of the Seoul Central District Court acquitted Lee Jung-hoon on fraud charges. Lee had been accused of wrongdoing in a case dating back to October 2018, and botched efforts to sell the crypto exchange to Kim Byung-gun, the Chairman and Founder of the plastic surgery firm BK Group.

Disputes between Lee and Kim have been ongoing ever since, and have centered on BXA, an altcoin created by the Singapore-based BK Group. Various parties have alleged that part of the deal – which fell apart over payment-related issues in 2019 – included an agreement to list the altcoin on Bithumb, a move that would likely have caused a price rise.

The prosecution had accused Lee of fraud-related legal violations worth some $70 million. And, per The Fact, prosecutors had sought to jail him for eight years.

The prosecutors claimed that the money had been disguised as a down payment – but had in fact been embezzled by Lee. But the District Court found him innocent of this charge.

Prosecutors are expected to attempt to overturn the verdict in a second trial – likely at the high court.

Bithumb has stated that Lee is its “former chairman” and currently plays no part in the exchange’s management or operations.

Ex-Bithumb Boss in the Clear, But Complications Continue

Legal wrangling about the complicated ownership structure of Bithumb have dogged the exchange for several years. The platform has been seeking a buyer for some time, but just how many shares are owned by Lee – and a reclusive millionaire named Kang Jong-hyun – appears to be shrouded in mystery.

The platform was once the largest per trading volume in South Korea, but has since been eclipsed by its closest rival Upbit. Some estimate that Upbit now controls 80% of the domestic market.

Bithumb one-year trading volumes. (Source: CoinGecko)

The increasingly acrimonious legal fight between Lee and Kim has continued to intensify, with Kim suffering a blow last year at the hands of a Singaporean court. The court found Kim guilty of selling BXA tokens without Lee’s, consent, contrary to an agreement between the two men.

The situation has been complicated further by police and prosecution raids on Kang-associated businesses. Public outrage erupted after it emerged that Kang had appointed the sister of his celebrity ex-girlfriend to a senior executive role at one of the publicly listed companies he owns.

Mysterious Death

More intrigue was recently sparked when the Vice President of Vidente, a firm that also owns a large stake in Bithumb, was found dead outside his home in the early hours of December 30. Police stated that it appeared the Vice President (surnamed Park) had committed suicide.

Kang’s brother and sister had previously been interrogated by investigators. And, Money Today reported, both had allegedly implicated Park.

The media outlet wrote:

“There are suspicions that Park’s decision to take his own life may have been caused by the fact that the Kang siblings passed all responsibility to him [when quizzed about possible instances of] embezzlement and price manipulation.”

Media outlets believe that Park may have been the unnamed “executive of a Bithumb affiliate” who was set to be tried on charges of destroying and concealing evidence ahead of a prosecution search of the premises.