|Bithumb Korea's customer service center in Seoul / Yonhap|
Legal battle intensifies over foundered Thai operation
By Park Jae-hyuk
Bithumb's Hong Kong subsidiaries are facing a civil suit for breach of contract, while their top executives are facing criminal charges of fraud.
The accusations were made by the cryptocurrency exchange operator's previous partner in Thailand, which took separate legal action in Korea last September against executives and major shareholders here, after the company unilaterally halted its business in Thailand.
A representative of the former partner in Thailand told The Korea Times that lawyer Kevin Lee from the Hong Kong firm, Prince's Chambers, has been hired for his company's legal battle in Hong Kong. The lawsuits will be filed this month.
The former Thai partner decided to sue Bithumb's Hong Kong subsidiaries ― Bithumb Global Holdings (BGH) and GBEX ― and their top executives, after it discovered they were involved in the plan to open a Bithumb exchange in Thailand. Some of the executives of these subsidiaries also hold high-level positions in Bithumb Korea, according to the plaintiff.
In 2017, Bithumb announced that it would recruit overseas partners to establish cryptocurrency exchanges in their countries by forming joint ventures. Its plan was reported by several news outlets at the time. Although Bithumb founded entities in Thailand and Japan in 2018, efforts to open exchanges in these countries were in vain.
The former Thai partner is claiming that Bithumb's sincerity is in question as the operator seems to have had no true intention to establish an exchange in Thailand. It alleges the company made empty promises from the start, simply to sell BXA coins by exaggerating the firms overseas presence.
The BXA coin was a virtual asset issued by BK Group Chairman Kim Byung-gun, who once attempted to take over Bithumb. After Kim gave up that plan due to financial concerns, and BXA failed to be listed on Bithumb, those who bought the coins on expectations over the acquisition sued him and Bithumb board Chairman Lee Jung-hoon, who is regarded as the de facto owner of the company.
"After Bithumb stopped its BXA coin business, its Thai operation became unnecessary, so the company ended its business in Thailand unilaterally, causing serious damage to us," the former Thai partner said. "BGH and GBEX collectively own a 49-percent stake in the joint venture in Thailand, and are wholly-owned subsidiaries of Bithumb Korea, so we sued Bithumb Korea's executives last year and decided recently to file lawsuits in Hong Kong against the Hong Kong subsidiaries and their executives, who are related to this issue more directly."
The fact that the criminal suit in Korea has been pending at Suseo Police Station in Seoul over the past nine months was another reason for its decision to take legal action in Hong Kong.
"We have yet to receive any response from the police," Kwon O-hoon of law firm Cha & Kwon, who represents the plaintiff, said. He added that the case has not been brought to court yet.
A separate lawsuit could be filed, "in the near future," by the cryptocurrency exchange operator's former partner in Japan, according to the Thailand partner.
When contacted for comment concerning the company's legal battle over the foundered joint venture in Thailand, Bithumb Korea's spokesperson had not responded as of July 6.