Former Bithumb chief faces potential prison term

The former chairman of the Bitcoin exchange Bithumb, Lee Jong-hoon, could face an eight-year prison term on charges of defrauding investors of $70 million. Prosecutors have made similar demands, Yonhap.

The case relates to the sale of BXA tokens as part of the Singapore-based BK Group’s 2018 bid to acquire it.

Lee Jong-hoon carried out an asset pre-sale to the buyer worth $25 million. Investors also bought the tokens for about $45 million.

Bithumb did not list BXA, which formed the basis for a lawsuit against Lee Jong-hoon and Kim Ben Gon, the chairman of BK Group, on charges of fraud. The latter was not named as a defendant — investigators concluded that he could be considered a victim of the token sale, as were other investors. 

Lee’s lawyers argued that the token sale was conducted in line with a ‘typical share-sale agreement’.

A court hearing is scheduled for December 20.

In September 2020, Seoul police carried out a series of raids at the company’s offices and seized a portion of Bithumb Holdings’ shares belonging to Kim Ben Gon.

That same time, the exchange’s CEO Lee Jong-hoon was summoned for questioning in the BXA fraud case. In light of reports about Bithumb’s troubles with authorities, media reported that the company was put up for sale again.

The possibility of acquiring the exchange was allegedly studied by its competitor Huobi.

In January 2021, journalists named a likely buyer of Bithumb the gaming company Nexon Group. Representatives of the latter denied reports of a potential deal worth 500 billion won (~$457 million).

In the spring, it emerged that talks to purchase the exchange were joined by the South Korean internet giant Naver. At the time, media reported at least ten companies seeking a stake in Bithumb.

Earlier, one of the largest American banks Morgan Stanley was on the list. Among potential buyers were Deutsche Bank, JPMorgan, Visa, CME’s subsidiary, Binance and several other unnamed entities.

In July, ForkLog reported that FTX was interested in buying the South Korean cryptocurrency exchange.

Follow ForkLog’s bitcoin news on our Telegram — cryptocurrency news, prices and analysis.