South Korean prosecutors raided Bithumb following allegations that its former CEO embezzled $2 million.
Authorities accused Bithumb’s ex-CEO of using a $2 million company lease deposit to purchase an apartment. However, the exchange maintains that he reimbursed the funds.
Prosecutors searched Bithumb’s offices in South Korea on March 20 amid concerns that its ex-CEO used embezzled funds for an apartment purchase.
The case revolves around suspicions that Bithumb provided a 3 billion Korean won (over $2 million) apartment lease deposit to its ex-CEO and board member, Kim Dae-sik, who still serves as an adviser to the company.
Prosecutors flagged possible financial misconduct, believing that Kim may have allocated part of the money toward securing a personal apartment.
The Financial Supervisory Service (FSS) previously examined the allegations and passed its conclusions to prosecutors, as reported by local media outlet YTN.
Speaking to The Chosun Daily, a Bithumb official admitted that parts of the allegations are true. According to the exchange, the executive borrowed money from a lender immediately after the FSS inquiry.
The exchange also claimed that Kim completely refunded the funds he spent on buying the apartment afterward.
Beyond the apartment case, internet rumors suggested that projects had to pay third-party fees to obtain a listing on Bithumb.
Wu Blockchain’s March 20 report, which relied on undisclosed sources, stated that two projects claimed they each paid $2 million and $10 million for listings on Bithumb and Upbit.
Allegedly, “intermediaries“ affiliated with Upbit’s shareholders and market makers facilitated the transactions. Wu Blockchain reported that certain intermediary fees ranged between 3% and 5% of the entire supply of tokens.
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As the investigation unfolds, the crypto exchange continues working toward going public.
Bithumb’s CEO, Lee Jae-won, is speeding up the company’s initial public offering (IPO) plans, as reported by the Business Post on March 18. The firm has made organizational changes to address legal risks surrounding its major shareholders.
In 2021, authorities formally accused Bithumb’s former chairman, Lee Jeong-hoon, of fraud. Since South Korea’s Supreme Court acquitted Lee Jeong-hoon, the exchange is expediting its IPO for 2025.
In 2020, local media revealed that Bithumb had started preparing for a stock market listing, marking the beginning of its IPO plans. Ongoing challenges prevented the company from successfully launching its IPO.
By choosing an underwriter for its IPO in 2023, the company reignited speculation about its intentions to go public.
Bithumb Korea confirmed this speculation in 2024 by introducing a non-exchange business to facilitate its stock market debut.
The report, however, coincided with financial struggles, as the exchange operator suffered a 57% loss in annual revenue for 2023.
