Authorities in South Korea have conducted a search at cryptocurrency exchange Bithumb amid allegations that its former chief executive officer misappropriated funds for personal property purchases.
On March 20, the Southern District Prosecutors Office in Seoul reportedly conducted searches at various Bithumb locations throughout the nation.
The inquiry revolves around claims that the exchange paid a lease deposit amounting to 3 billion Korean won (approximately over $2 million) to Kim Dae-sik, its former CEO and board member, who is currently serving as an adviser to the company.
Prosecutors expressed concerns about potential financial improprieties within the organization, suspecting that Kim may have utilized some of those funds to secure a personal apartment.
Bithumb claims its former CEO has reimbursed the funds
A local media outlet reported that the Financial Supervisory Service (FSS) had previously examined these allegations and submitted its findings to the prosecutors.
In a statement to The Chosun Daily, a spokesperson for Bithumb acknowledged that some of the claims hold merit.
The exchange indicated that the former executive secured a loan from a financial institution right after the FSS inquiry. Following that, Bithumb stated that Kim fully reimbursed the amount spent on the apartment acquisition.
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Bithumb under investigation as it aims for IPO
This investigation coincides with the exchange’s efforts to push forward with its public listing. According to a report from March 18, Bithumb’s CEO Lee Jae-won is accelerating the timeline for the long-anticipated initial public offering (IPO).
The report stated that the organization has undergone restructuring to mitigate judicial risks involving key shareholders.
In 2021, the exchange’s former chairman of the board, Lee Jeong-hoon, faced indictment on fraud allegations. As the Supreme Court of South Korea acquitted him, the exchange is expected to expedite its IPO plans for 2025.
Bithumb’s IPO aspirations trace back to 2020, when local media reported preparations for a stock market entry.
However, multiple challenges have hindered the successful realization of an IPO. In 2023, the company appointed an underwriter for its IPO endeavors, leading to renewed discussions surrounding its market debut.
By 2024, the speculation was substantiated as Bithumb Korea established a non-exchange entity to streamline its path to the stock market. Nevertheless, this development came alongside a staggering 57% decline in annual revenue for the exchange operator in the fiscal year 2023.
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