Former Bithumb Head Faces Prison Over $70 Million Fraud

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  • Former Bithumb chair Lee Jeong-hoon faces an eight-year prison term over four-year-old fraud allegations
  • Prosecutors claim that Lee tried to restructure the company’s governance for personal gain, obtaining $70 million fraudulently
  • Lee allegedly violated financial regulations, and the January 18, 2024, verdict could impact the Korean crypto sector significantly

Lee Jeong-hoon, the former chair of the Korean crypto exchange Bithumb, could be hit with as much as an eight-year prison sentence over fraud allegations he has been facing for four years. Prosecutors allege that Lee tried to restructure Bithumb’s governance to profit from exchange tokens, bypassing financial regulations and fraudulently obtaining 100 billion won ($70 million) in the process. A verdict is set for January 18, 2024, and the sentence could have ramifications for the crypto sector in the country.

Lee Accused of Defrauding BXA Buyers

The issue dates back to 2019, when the Singapore-based BK Global Consortium made a failed bid to buy Bithumb. As part of the deal, Bithumb created BXA tokens, which were sold to the public for a total of 30 billion KRW (around $25.7 million). However, the BK Global Consortium failed to pay for the tokens, and the sale collapsed in September that year. As a result, the BXA tokens became worthless overnight, and investors sued Lee, the CEO of Bithumb, for their losses.

Prosecutors allege that Lee had no intention of listing the BXA token and that he instead used the token sale as a way to defraud the BK Global Consortium. Prosecutors argue that the amount of damage caused was “very large” and was “especially great for ordinary coin investors.”

Defense Relying on Prosecution Discrepancies 

Lee faces legal issues related to accusations of violating the Act on Aggravated Punishment for Specified Economic Crimes, particularly fraud. Prosecutors have requested an eight-year prison sentence for Lee on fraud charges, and a guilty verdict could trigger a reassessment of governance frameworks in cryptocurrency exchanges, potentially resulting in increased regulatory scrutiny.

Lee’s defense disputes claims, pointing out discrepancies in the statement of BK Global Consortium chair Kim Byung-gun’s statement and questioning his reliability. Lee insists that Kim was informed about the progress of the BXA token listing and said that the token sale was conducted within current guidelines.