On Thursday, February 2, 2023, the former chairman of the crypto currency exchange in South Korea, known as Bithumb, Kang Jong-Hyun, was taken into custody after being charged with embezzlement, fraudulent, unlawful activities, and breach of trust. This new development comes only one week after South Korean officials asked for the proprietors of Bithumb to be arrested.
The Arrest of the Ex Chairman
In addition to Jong-Hyun, the police in South Korea asked for the arrest of two additional Bithumb executives who were associated with his younger sister Kang Ji-Yeon.
Yonhap News, a South Korean news outlet, reported (1) a week ago that South Korean law enforcement officers conducted a search warrant at the headquarters of Bithum as part of an investigation into the possible manipulation of the price of a currency that is traded on the Bithumb market. However, the coin in question has yet to be located or recognized.
According to reports, a second investigation into alleged tax evasion at Bithumb and its subsidiaries had also been started by South Korea's National Tax Service. However, the inquiry against Kang and the other executives is being conducted independently from the probe into tax evasion.
Claims have been made that Kang and other individuals misappropriated money from Bithumb and plotted to manipulate the firm's stock price. These allegations are at the heart of the current arrest.
Nevertheless, Bithumb is one of only five Korean crypto currency exchanges that are still operational following a crackdown in 2021 that caused approximately 70 domestic exchanges to be forced to close their doors due to their failure to comply with regulatory requirements.
Bithumb on Shaky Grounds
The crypto currency exchange Bithumb has had a rough go of it over the past few months. On January 3, 2019, the former Chairman of Bithumb, Lee Jung-Hoon, was found not guilty of the allegations that he had committed fraud for $100 million in connection with the crypto currency exchange.
Outside his South Korean residence in December 2022, the body of Park Mo, the most significant stakeholder in the crypto currency exchange Bithumb, was discovered.
This occurred after he was designated as a suspect in the investigation that the prosecutor was conducting into allegations of stock manipulation & theft. According to the reports in the regional media, Park Mo committed suicide and died.
In the past year, South Korean officials have increased the attention they pay to crypto currency companies based in the nation. Since the fall of the Terra ecosystem in May 2022, the level of participation of the various regulatory bodies in the crypto currency industry has skyrocketed.
Rumors were going around at one point that the FTX derivatives platform was considering making an offer to buy Bithumb. Despite this, the FTX exchange itself was brought down later in 2022 after discovering that the cash belonging to consumers had been misappropriated.