The owner of South Korea’s second-largest cryptocurrency exchange, Bithumb, has been accused of manipulating the stock prices of several affiliated companies, leading to an arrest warrant being issued by prosecutors in Seoul, local media reported on January 25th.
The report stated that the investigation, which is looking into allegations of embezzlement by Bithumb executives, has led to an arrest warrant being requested for Kang Jong-hyun, the chairman and owner of Bithumb.
On January 25th, the Seoul Southern District Prosecutor’s Office Financial Investigation Division 2, led by Chief Prosecutor Chae Hee-man, charged Kang and two other executives with embezzlement, breach of trust, and fraudulent transactions under the Act on the Aggravated Punishment of Specific Economic Crimes and the Capital Markets Act.
Kang, who is the older brother of Kang Ji-yeon, CEO of Bithumb affiliates Inbiogen and Bucket Studio, is suspected of playing a central role in manipulating the stock prices of these companies through the issuance of convertible bonds. He is also known for being a hot topic in the media due to dating rumors with actor Park Min-young.
According to the report, in October of last year, prosecutors seized and searched the offices of Bithumb affiliates Vident, Inbiogen, and Bucket Studio as part of their investigation into allegations of company money being stolen and stock prices being manipulated by Kang. Vidente is the largest shareholder of Bithumb Holdings, with a 34.2% stake, and Inbiogen and Bucket Studio are also major shareholders.
Former Bithumb Chairman And $100M Fraud Charge
This is not the first time that Bithumb executives have faced legal trouble. In January 2021, former Chairman Lee Jung-Hoon was acquitted on charges of committing a $100 million fraud related to the exchange.
However, he was indicted in July 2021 and was facing a prison sentence of eight years for the alleged theft of money from cosmetic surgeon Kim Byung-Gun during an acquisition deal.
To make matters worse, Bithumb’s largest shareholder, Park Mo, was found dead outside his home in South Korea in December 2022 after being named as a suspect in an investigation into embezzlement and stock manipulation. Local media reported that he had taken his own life.
The arrest of Kang In-sik and his sister is a serious blow to Bithumb. The exchange has not yet commented on the matter, but it remains to be seen how these developments will impact the company and its users.