South Korean authorities have launched an investigation into Bithumb over alleged fund misuse. The probe raises concerns about financial transparency and regulatory compliance within the crypto exchange industry.
Recently, authorities in South Korea raided Bithumb, one of the country’s biggest cryptocurrency exchanges.
As per the investigators, Bithumb gave a lease deposit of nearly 3 billion Korean won (over $2 million) to Kim, who is currently the adviser to the exchange. Concerns were raised when the prosecutors suspected that a part of this money was diverted for personal purchases of properties.
Bithumb is claiming that Kim borrowed a loan and then returned the fund in full. While acknowledging some parts of the claims. After being flagged by the Financial Supervisory Service (FSS), which later sent the issue to prosecutors, the company claims it made the repayment around that time.
It was reported that crypto firms paid massive intermediary fees to get a listing on Bithumb and Upbit, the latter being another exchange, apart from the misappropriation. Sources that wish to remain nameless claimed that certain projects financed expenditures between $2 million and $10 million to gain placement on these companies that helped in the practice. Certain intermediaries were allegedly linked to the shareholders and market makers of Upbit. Some reports claimed that fees for having tokens listed could be as high as between three and five percent of the total supply.
With an IPO in the cards, Bithumb’s IPO plans come at the commencement of an investigation into the exchange. Bithumb CEO Lee Jae-won is rearranging the organization to reduce legal dangers surrounding important shareholders before the company’s expected stock market launch in 2025. The Bithumb IPO efforts began back in 2020, but regulatory issues and internal troubles halted progress. In 2023, the firm renewed its listing ambitions by selecting an underwriter, and by 2024, it set up a non-exchange business division to accelerate things. Bithumb is facing some challenges due to financial issues, including a 57% drop in annual revenue for 2023, according to reports.
Implications for Industry and Market’s Response
The ongoing probe may cast wider shadows over South Korea’s crypto market as regulators are likely to unleash scrutiny regarding exchanges’ governance and finances. People who invest in digital money are closely watching the probe as it might change regulations and shape confidence in online lenders.
As authorities keep investigating, Bithumb’s reputation and future remains unclear The incident shows how important stricter rules and ethical actions are for businesses in the crypto world.
