- Lee Jeong-hoon, former Bithumb Chairman, faces an eight-year prison term.
- Prosecutors assert Lee misled Kim about joint Bithumb management, BXA Coin listing, and restructuring to evade financial regulations.
- The January 18, 2024, appeal verdict holds industry-wide implications in South Korea.
Lee Jeong-hoon, the former chairman of Bithumb, one of South Korea’s major cryptocurrency exchanges, is at the centre of a legal battle in an appeal whose verdict is scheduled for January 18.
The outcome of Lee’s appeal could establish a precedent for legal systems addressing cases involving cryptocurrency exchanges and governance. The development comes as Bithumb plans for an IPO on KOSDAQ by 2025.
The allegations against Lee Jeong-hoon
Lee Jeong-hoon’s legal troubles revolve around allegations of violating the Act on Aggravated Punishment for Specified Economic Crimes, with a focus on fraud. The prosecution claims he orchestrated a 110 billion won fraud involving BK Group Chairman, Kim Byung-geon. The charges stem from a deal where Lee allegedly offered Kim the opportunity to acquire and co-manage Bithumb, coupled with promises to list BXA (Bithumb Coin) on the exchange.
Prosecutors argue that Lee planned to restructure Bithumb’s governance to profit from exchange coins while sidestepping financial regulations. They assert that Lee was aware of the challenges in listing BXA Coin but failed to disclose this information to Kim. As listing difficulties arose, Lee allegedly continued to receive payments without informing Kim of the decision not to list BXA Coin.
According to a local South Korean media outlet, South Korean prosecutors requested an eight-year prison sentence for Lee Jung-hoon.
According to Korean media Decenter, South Korean prosecutors requested an eight-year prison sentence for Lee Jung-hoon, the former chairman of the board of directors of Bithumb, South Korea’s second largest exchange. Lee Jung-hoon is accused of committing fraud of approximately…
— Wu Blockchain (@WuBlockchain) November 17, 2023
Lee’s defence team counters these claims, highlighting inconsistencies in Kim’s statements and questioning his credibility. Lee maintains his belief in Kim’s capability to lead Bithumb, asserting that Kim was aware of the progress regarding BXA Coin’s listing.
Implications for the cryptocurrency industry
The case underscores the intricate regulatory landscape of the cryptocurrency industry and its potential impact on investor confidence.
The fate of Bithumb and the future of BXA Coin are closely tied to the appeal’s outcome. A conviction may prompt a reevaluation of governance structures in crypto exchanges, potentially leading to more stringent regulatory measures.
As the cryptocurrency community and investors await the appeal verdict, the case serves as a stark reminder of the evolving nature of the industry. It emphasizes the need for clear regulatory guidelines to address governance issues and maintain trust among investors and stakeholders.