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Bithumb faces lawsuit from Thai partner

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Bithumb headquarters in Seoul / Yonhap
Bithumb headquarters in Seoul / Yonhap

By Park Jae-hyuk

Bithumb is facing a lawsuit from a joint venture it established in Thailand in 2018. This would have a negative impact on the leading Korean cryptocurrency exchange operator's recent bid to sell its controlling stake on the local M&A market.

According to Cha & Kwon, Monday, a representative of Bithumb Thailand hired the law firm recently to sue employees and major shareholders of Bithumb Korea and Bithumb Global Holdings for fraud.

"Our client previously joined hands with Bithumb Korea, when it was looking for global partners to expand its presence overseas," lawyer Kwon O-hoon of the law firm said. "However, our client said Bithumb Korea unilaterally stopped its businesses in Thailand. The company has been suspected of using its foreign partners to do other businesses."

In 2017, Bithumb Korea announced it would recruit foreign partners to establish cryptocurrency exchanges in other countries. The establishment of foreign affiliates in the following year was reported by several news outlets and Bithumb hired local employees in Thailand.

However, the opening of an exchange there eventually floundered.

Bithumb Thailand has claimed Bithumb Korea made an empty promise from the beginning, without having any real intention of setting up and running a cryptocurrency exchange in the Southeast Asian country.

Bithumb Korea declined to comment on this issue, saying the lawsuit has yet to be filed.

The company's board chairman Lee Jung-hoon, who is regarded as de facto owner, is also embroiled in separate legal disputes.

He was summoned last week by the Seoul Metropolitan Police Agency after BXA coin investors accused him of fraud for allegedly not keeping his promise to list the virtual money on the cryptocurrency exchange.

Following the accusation, police have searched Bithumb headquarters multiple times.

In addition, the chairman's considerable stake in Bithumb has been put under provisional attachment since last week because the Seoul Central District Court accepted a request from BK Group Chairman Kim Byung-gun, who has been in a dispute with Lee since his previous attempt to take over Bithumb ended in failure.

Industry insiders expect a series of legal battles will make it difficult for Bithumb to sell its stake.

Bithumb's previous leak of customer data and its questionable sustainability are cited as additional factors causing difficulties for its attempt.

According to industry sources, Bithumb, which hired Samjong KPMG as the underwriter, shortlisted potential buyers recently.

The company was initially expected to go public when it was reported that it hired Samsung Securities as the lead underwriter for its initial public offering. However, a source said the company has changed its plan due to private equity firms and venture capital firms showing interest in the takeover.

In 2018, Bithumb Korea posted 391.6 billion won ($337 million) in sales and 265.1 billion won in operating profit, and suffered a 205.7 billion won net loss. Although its sales and operating profit declined to 144.6 billion won and 67.7 billion won, respectively, in the following year, the company turned a profit by reposting 37.2 billion won in net income.


Park Jae-hyuk pjh@koreatimes.co.kr


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