South Korea: Prosecutors seek warrant to arrest Bithumb owner on fraud allegations

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South Korea’s largest exchange Bithumb is at the center of the storm as prosecutors slam new charges against the platform’s chairman and affiliates.

Bithumb’s chairman and owner Kang Jong-Hyun is facing charges of embezzlement of company funds running into millions of dollars. The Financial Investigation 2nd Division of the Seoul Southern District Prosecutor’s Office is spearheading the case against the exchange‘s owner on the alleged grounds of breaching the Capital Markets Act.

Prosecutors alleged that Kang and two other top executives of the exchange were in breach of the duty of trust imposed on them under the law. Under South Korea’s Act on the Aggravated Punishment of Specific Economic Crimes, Bithumb’s executives are staring at a lengthy prison sentence in addition to the payment of fines.

Authorities say Kang was involved in stock price manipulation in Bithumb’s affiliate companies like Vident, Bucket Studio, and Inbiogen using convertible bonds. Prosecutors have filed for an arrest warrant against Bithumb’s CEO, with insiders brimming with optimism that the courts will grant their request.

Over the last month, Bithumb has grappled with several cases against South Korea’s law enforcement agencies. The exchange is the subject of a “special tax investigation” by South Korea’s National Tax Service seeking to unravel alleged tax evasion cases.

Bithumb was the subject of a tax investigation back in 2018, which led to the payment of a lump sum to the NTS running into millions of dollars.

In December, an executive of the exchange Park Mo was found dead at his apartment amid a legal battle with prosecutors on embezzlement and stock price manipulation charges. In a win for the exchange, former chairman Lee Jung-Hoon was acquitted of a $70 million fraud charge.

South Korean prosecutors are on a rampage

Terra’s collapse in early 2022 rattled South Korean law enforcement to the core, sending them on a rampage against virtual currency service providers. In the weeks following the project’s collapse, multiple raids were carried out against local exchanges in search of any signs of cooperation.

The crackdown extended to former Terraform Labs executive Daniel Shin with operatives raiding his home and the premises of his new startup. Multiple charges have been brought against Shin in a valiant attempt to bring closure to the Terra debacle.

Law enforcement agencies are collaborating with Serbian authorities and Interpol to apprehend Terraform Labs’ CEO Do Kwon, rumored to be holed out in Europe since the invalidation of his passport.

Watch: Law & Order: Regulatory Compliance for Blockchain & Digital Assets