South Korean Court Clears Former Bithumb President of Fraud Charges in First Trial

South Korean prosecutors charged the former Bithumb President with engaging in fraud through the sale of BXA coins.

Angry man being punched by a pink human hand coming out of a computer
  • Ex-Bithumb President Lee Jeong-hoon was cleared of all fraud charges by the Seoul Central District Court. 
  • Earlier, prosecutors accused Lee of fraud through the sale of BXA coins.
  • Lee was also accused of misappropriating funds meant for Bithumb’s acquisition.
  •  Lee’s defense team rejected the allegations by comparing the sale of the coin to a stock stake contract.
  • Several controversies have plagued Bithumb in recent months, putting the exchange in a poor light.

Seoul’s Central District Court, presided by Judge Kang Gyu-tae, cleared the former President of Bithumb, Lee Jeong-hoon, of all fraud charges levied against him.

Recall that the former president of the crypto exchange has been facing trial in South Korea for a while now. The prosecutor accused him of indulging in fraud by selling BXA coins, a token belonging to Blockchain Exchange Alliance. Lee allegedly sold BXA tokens worth about $25 million to the BK group without listing them.

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Additionally, Lee was accused of misappropriating a part of the fund meant to acquire Bithumb. According to findings, the chairman of BK Group, Kim Byung-Gun, initially planned to purchase the crypto exchange in a deal worth billions of dollars. 

Byung-Gun said he made an initial payment of $70 million, with a promise by Lee to list the BXA token. This thus ignited a lawsuit between Lee and  Kim Byung-Gun and led to the intervention of South Korean investigators.

In a filing, prosecutors requested an eight-year jail term for the former president. In addition, they claimed investors suffered severe damages from the alleged illicit act of Lee. 

During the court hearing, Lee’s defense team dispelled the allegations by comparing the sale of the coin to a stock stake contract. Further, Lee’s legal team maintained that their client did everything with pure intention.

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Reacting to the development, Bithumb said it respects the court’s ruling. In a statement, the exchange added that it operates under a system of professional managers, stressing that Lee is not involved in the management of Bithumb.

Bithumb and its Lingering Controversies

Bithumb has, in recent times, been ravaged by numerous controversies, putting the exchange in a bad light.

Investigations on the allegation started last October after it was suspected that the Bithumb ex-President conspired with other execs of the exchange to amass illicit funds from the manipulation. 

A few days ago, reports confirmed that the vice president of the largest shareholder company of the exchange, Mr. Park, committed suicide amidst ongoing investigations over alleged manipulation of stock prices belonging to Bithumb affiliates. South Korean authorities have pledged to investigate Park’s death.

On the Flipside

  • South Korean exchanges established emergency systems after the Terra-Luna collapse to prevent similar incidents. It’s now mandatory for all local exchanges to list tokens based on the guidelines issued by the Korean regulator.

Why You Should Care

Lee has been facing charges from prosecutors for a while now. However, prosecutors dismissed investors’ claims that Lee and Kim had conspired in the sales. It may be a relief for the South Korean exchange, which has been struggling due to allegations and bad market conditions. 

 

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Soumen Datta

Soumen has been a dedicated researcher and writer in the field of cryptocurrencies for the last few years. Even though Indian crypto regulations are still unclear, he believes that India will continue to innovate in the years to come. He loves to play his guitar and sing along in his spare time. He holds bags mostly in BTC, ETH, BNB, MATIC, ADA.