| In this file photo, the Bitcoin logo appears on the display screen of a cryptocurrency ATM, last week. AP-Yonhap |
By Lee Kyung-min
Korea's cryptocurrency exchange Bithumb is coming under heavy criticism over its alleged mismanagement and questionable business dealings, as evidenced by expanding police and prosecution investigations into key figures related to digital asset investments.
Seoul Metropolitan Police Agency said Monday that an investigation is underway into BK Medical Group Aesthetic Clinic CEO Kim Byung-gun and the exchange's de facto owner Lee Jeong-hoon, who already faces fraud charges involving more than 112 billion won ($100 million). Lee is the former chairman of Bithumb Korea and Bithumb Holdings.
The investigation that began in mid-July is separate from an earlier fraud charge filed by the Seoul Central District Prosecutors' Office, which indicted Lee without detention for defrauding Kim out of $100 million for a down payment in what later became a failed equity sale of Bithumb stakes. Kim was cleared of the charges at the time because prosecutors concluded that he was a victim of Lee's fraud scheme.
However, 14 investors filed a complaint with the policy agency, claiming that the two were in collusion to defraud them.
They say they gave Kim 718 bitcoins and 7,793 ethereum virtual coins ― with a combined value of 6.92 billion won ― after he said in October 2018 that he acquired Bithumb from Lee and that Blockchain Exchange Alliance (BXA) coins will be listed on the exchange.
The acquisition was called off in September 2019, because Kim did not pay Lee the remainder of the funds. The BXA coin listing was also called off, incurring nearly 7 billion won in investor losses.
Previously, prosecutors charged Lee for making a proposition to Kim on the joint management and equity purchase of the exchange in October 2018, based primarily on the BXA coins on Bithumb, despite his clear inability and lack of intention to do so.
Lee, they said, asked for a down payment in what he claimed was only a fraction of the profit to be generated from the BXA coin listing.
According to CoinMarketCap, one bitcoin had been traded for $39,793.80, as of Monday 3 p.m., down 6.27 percent from a day earlier and up 3.77 percent from a week earlier. One ethereum had been traded for $2,558.34, as of Monday 3:30 p.m., down 2.36 percent from a day earlier and up 10.55 percent from a week earlier.