South Korean authorities attack Bitham with corporate funds

According to local media reports, South Korean prosecutors stormed the headquarters of Crypto Exchange Bithumb on March 19 as part of an investigation into whether the company's former CEO misused corporate funds to buy the apartment.

Authorities at the Southern District Attorney's Office searched the Yeok Sam-dong office in Bitham and considered the claim that the exchange provided 3 billion wins ($2.3 million) of lease deposits to former CEO and current advisor Kim Dae-sik.

Investigators suspect Kim will use some of these funds to acquire a private residence in Seoul's seongsu-dong district.

The timing of the investigation raises new concerns for Bithumb, which has been working towards the long-awaited initial public offering (IPO).

CEO Lee Jae-Won recently reaffirmed the company's intention to list it on the stock market in 2025, and made structural changes to minimize legal risks associated with key shareholders.

Repaid funds

South Korea's financial regulator, Financial Supervisory Services (FSS), had previously investigated the case before forwarding it to prosecutors.

After the investigation, a Bitham spokesman admitted in an interview with Chosun Daily that Kim received loans from outside lenders after the FSS investigation and later repaid the funds.

Despite the repayment, prosecutors are considering whether the original transaction violated financial regulations or corporate governance rules. The incident has stepped up Bithumb's internal financial management scrutiny as authorities continue to monitor the country's crypto sector for potential fraud.

It also raises concerns about broader governance and financial practices within the exchange, which have been facing repeated legal and regulatory scrutiny in recent years.

List of claims

The attack came amid another allegation that Bithumb and rival Exchange Upbit had promoted the token list through an intermediary where the project allegedly charged a large fee.

Researcher Wu Blockchain reported that some projects paid between $2 million and $10 million to secure a list of exchanges. The allegations also suggest that certain intermediaries have relationships with Upbit shareholders and market manufacturers, with fees ranging from 3% to 5% for token supplies.

Upbit denied the claim, providing a list of projects where WU blockchain allegedly paid brokerage fees, and demanding evidence to support the charges.

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