TLDR
- On March 19, Bithumb's headquarters were searched as part of an inquiry into suspected misuse of corporate assets.
- It is alleged that ex-CEO Kim Dae-sik utilized a substantial leasing deposit of 3 billion won, equivalent to 2.3 million USD, to buy a residence for himself.
- In response to these charges, Bithumb conceded that Kim took out an outside loan post-investigation to reimburse the company.
- This investigation coincides with Bithumb’s aspirations for an IPO, scheduled for 2025, drawing increased attention to the exchange.
- Additional accusations suggest that Bithumb and Upbit might have used middlemen to arrange token listings, charging considerable fees ranging from 2 to 10 million dollars.
South Korean authorities searched Bithumb’s main offices on March 19 as part of a legal probe into claims of fund misappropriation by a former top executive.
Law enforcement from the Seoul Southern District examined Bithumb’s premises in Yeoksam-dong, seeking evidence of a 3 billion won deposit given to former CEO Kim Dae-sik.
Authorities suspect that Kim channeled these funds into acquiring an apartment in Seoul. Currently, Kim has transitioned to an advisory role post his CEO tenure.
The Financial Supervisory Service (FSS), South Korea's regulatory body, initially scrutinized the matter before handing it over to the prosecutors for deeper investigation.
A Bithumb representative admitted to certain allegations during a conversation with The Chosun Daily, clarifying that Kim had borrowed externally to settle the disputed funds.
Although Kim has settled the amount owed to Bithumb, investigatory efforts remain ongoing to confirm any regulatory breaches.
There's ongoing assessment pertaining to whether Kim's actions violated any financial or corporate governance statutes, placing Bithumb’s financial practices under the spotlight.
Exchange Governance in Question
Bithumb is navigating rough waters amid its ambitious plans for an IPO, with its financial integrity under examination.
CEO Lee Jae-won reaffirmed their intentions to take the company public by 2025, part of a strategy to mitigate legal exposures tied to prominent shareholders.
Back in 2021, Bithumb faced a separate legal hurdle when its former board leader, Lee Jeong-hoon, was embroiled in a fraud scandal resulting in an indictment.
However, favorable court rulings eventually vindicated the Bithumb executive, paving the way for further IPO progress.
Bithumb's IPO aspirations can be traced back to 2020, gaining momentum in 2023 with the selection of an underwriter.
By 2024, Bithumb enhanced its stock market entry strategy by establishing a business outside the typical exchange realm, although they reported a significant income drop in 2023.
Besides fund misuse queries, Bithumb also contends with controversies surrounding suspect token listing deals on both its platform and Upbit.
Research from Wu Blockchain highlights hefty fees paid by some crypto initiatives, allegedly assisted by intermediaries to ensure listings on these exchanges.
The purported intermediary charges are said to range between 3% and 5% of token supply, though Upbit has challenged these claims and seeks substantiation.
In response, Upbit has requested a comprehensive account of projects that bore brokerage fees, seeking full transparency regarding these allegations.
The current developments draw attention to governance flaws within Bithumb, as it continues to be a recurring focus of legal scrutiny.
The vigilant watch over South Korea’s cryptocurrency sector could lead to significant reverberations affecting Bithumb’s IPO and market reputation.
