Bithumb executives under probe in South Korea over alleged token listing bribery

South Korean law enforcement agents are investigating Bithumb CEO Lee Sang-jun on allegations of receiving bribes to list digital currencies on the platform, Forkast News has reported.

Officials from the Seoul Southern District Prosecutors’ Office confirmed that investigations against Lee are underway but failed to offer more clarity into its extent. The investigations follow a police raid on Lee’s private residence and Bithumb’s office complex in search of any incriminating evidence.

Bithumb is not the only entity facing the repercussions of a crackdown as an ex-employee of South Korean exchange Coinone faces similar investigations of accepting bribes to list certain tokens on the platform. The prosecution did not reveal the former employee’s name on the grounds of South Korean privacy law.

According to local media house Chosun Biz, the investigation involving exchanging bribes for listings has been extended to several leading South Korean digital currency exchanges. It claims that law enforcement agencies are also investigating Korbit, Gopax, and Upbit for illegally listing tokens.

In South Korea, exchanges are solely responsible for token listings under a joint body of leading platforms known as the Digital Asset Exchange Joint Consultative Body (DAXA). The operations of DAXA have been called into question after the native token of game publisher Wemade was delisted across four leading exchanges.

South Korean regulators are keen on establishing a new legal framework requiring token issuers to receive approval from financial authorities. The proposal is widely expected to be part of the country’s incoming Digital Asset Basic Act, which will provide an encompassing regulatory framework for digital currencies and exchanges.

Under the proposed law, tokens will only be exempted from regulatory scrutiny if they are already listed on major exchanges, but it remains unclear if the DAXA is willing to relinquish its authority.

The implosion of Terra’s ecosystem triggered a grim response from regulators marked with multiple raids on the offices of several exchanges and an overhauling of the current digital currency legal framework.

Bithumb’s woes roll on

Bithumb has been under the spotlight for the wrong reasons ranging from multiple investigations from law enforcement agencies to the mysterious suicide of one of its executives that was under investigation for fraud.

The de facto owner of the firm, Kang Jong-hyun, was revealed to be under investigation for embezzlement and breach of the duty of trust while his younger sister is facing charges of manipulating Bithumb’s stock price.

Bithumb is also facing an investigation from the National Tax Service for allegedly evading taxes after facing similar scrutiny in 2019.

Watch: Tokenizing Assets & Securities on Blockchain