The former chairman of one of South Korea’s largest digital currency exchanges has been turned over to the country’s prosecutor’s office. Lee Jung-hoon, former chairman of Bithumb Korea, is under investigation for fraud. Prosecutor’s involvement shows that the investigation into the alleged fraud in Bithumb may intensify.
Bithumb, the second largest exchange in South Korea after Upbit, was investigated for fraud in connection with a token sale in 2018. The exchange conducted the Blockchain Exchange Alliance (BXA) token sale and reportedly raised $ 25 million. In addition to the alleged ICO fraud, Lee is also being investigated for alleged fraud, tax evasion and irregular asset transfers from South Korea.
Seoul metropolitan police called Lee for questioning in September. Little has been known about the progress of the investigation. According to a report from a point of sale, Seoul Police have turned the former Bithumb Korea executive over to the Supreme Prosecutor’s Office. The office works with the Korean Supreme Court and is empowered to conduct independent investigations, use related parties for questioning, and even confiscate property.
The BXA token ICO continued to track the exchange and its executives three years later. Prior to the ICO, Bithumb informed investors that the token would be listed on the stock exchange as soon as a Singaporean investment company acquired Bithumb. This resulted in investors bringing in KRW 30 billion ($ 25.7 million) into the project. However, the acquisition agreement failed and Bithumb never listed the BXA token.
Without the listing, the BXA token was basically worthless. As a result, the price of the token fell, losing millions of dollars to investors. Lee has been identified as one of the architects of the BXA ICO and authorities have been investigating him since then. The police originally investigated him for tax evasion and transfer of property abroad, but according to the latest report, they have decided not to pursue these charges.
South Korea continues to lead the way in regulating blockchain and digital currencies. The latest report claims that the country’s top politicians are pushing for industry regulation, as opposed to a tough stance.
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