South Korean Prosecutors Launch Investigation into Bithumb Cryptocurrency Exchange over Claims of Improper Use of Company Funds

Prosecutors in South Korea have launched an investigation into Bithumb, one of the country's largest cryptocurrency exchanges, over claims that company funds were improperly used

Prosecutors in South Korea have reportedly launched an investigation into Bithumb, one of the country’s largest cryptocurrency exchanges, over claims that company funds were improperly used to assist a former executive in purchasing an apartment.

Officials from the Seoul Southern District Prosecutors’ Office raided Bithumb’s headquarters in Yeoksam-dong and other locations on Wednesday, Yonhap News reported.

The probe focuses on allegations that Bithumb provided a 3 billion KRW ($2 million) security deposit for an apartment rental in Seongsu-dong, Seoul, for Kim Dae-sik, the company’s former CEO and current advisor.

Kim allegedly used the funds to purchase an apartment in Gangnam-gu, Seoul, and encountered difficulties making rental payments after failing to sell the property.

To assist Kim, Bithumb reportedly withdrew the security deposit funds despite not being directly involved in the apartment purchase.

The Financial Supervisory Service, South Korea’s financial regulator, initially reviewed the case before forwarding it to prosecutors.

Speaking to The Chosun Daily, a Bithumb spokesperson reportedly acknowledged some of the allegations were correct, adding Kim repaid the loaned amount in its entire after securing a loan.

The spokesperson said: “It is true that our company provided the security deposit funds for the apartment rental, and the company also made some contributions to a former executive’s project.”

The statement continued: “The former CEO fully repaid the borrowed amount after securing a loan from a bank to sell the apartment. We also used part of the project fund payment to invest in the project.”

Earlier this year, Wu Blockchain reported that some projects had paid up to $10 million in fees to list their tokens on Upbit and Bithumb.

The report claimed that projects applying for listing on Upbit had to pay a fee of $5 million to $10 million, while those applying for listing on Bithumb had to pay $3 million to $5 million.

The report also claimed that projects applying for listing on smaller exchanges had to pay a fee of $1 million to $3 million.

However, these claims could not be immediately verified. CoinDesk has reached out to Upbit for comment.

Bithumb has faced multiple legal challenges in recent years, including tax probes and a raid related to a price manipulation probe. Its latest challenge comes as the firm was reported to be considering listing shares on the Nasdaq.