Bithumb ex-chairman not guilty of fraud charges by South Korean court

Bithumb’s former chairman Lee Jung-Hoon has been found not guilty of fraud-related charges by a Seoul Central District Court after a lengthy trial.

According to the Korea Economic Daily, Bithumb’s former chair was absolved of the charges leveled against him by investigators because they failed to present sufficient evidence to back up the charges. Lee has been embroiled in a legal scuffle since 2018 after prosecutors alleged fraud in the acquisition of the exchange from Kim Byung-Gun.

The investigators claimed Lee netted an illegal profit of KRW112 billion ($87 million) in the KRW400 billion ($314 million) acquisition deal with BK Medical Group CEO Byung-Gun. Court filings allege that Lee presold BXA tokens worth $25 million to BK Group, which were ultimately sold for $45 million.

Prosecutors believe that Bithumb’s failure to list the BXA tokens triggered losses for investors, forcing them to charge him under South Korea’s Act on the Aggravated Punishment of Specific Economic Crimes. In his defense, Lee said the token sale was carried out as a “typical stock sale contract.”

“We respect the court’s ruling. Bithumb is operated under a system of professional managers, and former Chairman Lee Jung-hoon is not involved in Bithumb’s management at all,” the firm said after the judgment.

If found guilty, Lee would have been convicted with an eight-year prison sentence. The court’s decision to absolve him of the allegations is coming a week after Bithumb’s biggest shareholder was found dead while under investigation for embezzlement and stock price manipulation.

Holding up despite the fraud charges

The row over the pre-issued tokens spread all the way to the Singaporean court, in which Kim was charged guilty of selling BXA tokens without the consent of Jung-hoon. The court ordered the BK Medical chief to return the illegal proceeds from the sale to a Singapore-based entity, BTHMB.

There has been word of potential acquisitions for the virtual currency exchange, with FTX rumored to be close to acquiring a controlling stake in the exchange in July 2022. However, FTX’s liquidity crisis ended the speculation of an acquisition.

Bithumb was part of the exchanges raided by South Korean law enforcement in the wake of Terra’s collapse as they sought to prevent a recurrence of the incident. So far, the exchange has continued operating normally without interference from regulators and appears to have steadied itself despite fraud charges against its executives.

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