Lawmakers and regulators in South Korea are scrutinizing Bithumb “Owners” more closely

Posted by cryptonews Crypto News October 25, 2024 724 Views

Bithumb spokesperson says it is still looking to complete IPO by “end of next year”

The ownership structure of the South Korean cryptocurrency exchange Bithumb is the subject of yet another round of inquiries from lawmakers and regulators.

The exchange, which is still aiming for an initial public offering (IPO), has stated that it is making every effort to increase transparency in the situation.

Bithumb ‘Owners’ Under Spotlight

The media outlet Newspim reported that attendees at an October 24 meeting of the National Assembly’s Political Affairs Committee “demanded” that the financial authorities step in.

Additionally, the Financial Services Commission (FSC) declared that it would carry out its own “review” of the situation.

The ownership structure of Bithumb is enmeshed in mystery and controversy. Two people who are believed to hold sizable stakes in companies connected to Bithumb have been involved in lengthy legal disputes.

Among them is the reticent and contentious Kang Jong-hyun, who is said to be the “actual owner” of three companies that hold minority shares in Bithumb.

Kang has been charged by prosecutors with price manipulation and embezzlement in connection with previous altcoin listings on Bithumb.

They believe Kang is the owner of Vidente, a publicly traded company that owns 34.22% of Bithumb Holdings.

Former Bithumb CEO Remains a Concern for Regulators

Politicians and regulators are also worried about Bithumb Holdings’ biggest shareholder, former CEO Lee Jung-hoon.

According to reports, Lee “controls Bithumb Holdings” by owning a number of minority shares in related companies. Additionally, he owns 10% of Bithumb Holdings.

And Lee, too, is embroiled in a legal battle stemming back to a failed Bithumb sale to the BK cosmetic surgery group.

At the National Assembly meeting, Kwon Seong-dong of the People Power Party, said:

“There are issues with Bithumb, such as the fact that major shareholders are being tried on fraud charges, or have been arrested for embezzlement and stock price manipulation. These were all mentioned in a 2022 National Assembly audit. But it appears that the financial regulators still do not have a proper understanding of this matter.”

Bithumb trading volumes over the past 12 months. (Source: CoinGecko)

FSC Wants New Powers

The FSC Chairman Kim Byung-hwan replied that he is currently powerless to act. But he added that the FSC is taking steps to address this.

“There is no basis under the current law to review major shareholders under the terms of the Specific Financial Information Act or the Virtual Asset User Protection Act [two crypto-specific laws]. Accordingly, I have submitted a bill to amend the Special Financial Information Act. That will let us conduct a review of [Bithumb’s] major shareholders.”FSC Chairman Kim Byung-hwan

2014 saw the launch of Bithumb. With a 73.56% ownership stake in the platform, Bithumb Holdings is its largest known shareholder.

According to a Bithumb official, the organization has been “making efforts” to “overcome risks.”

Bithumb Owners and Exchange IPO Bid

As it strives to become the first stock exchange-listed platform in South Korea, the company has already decided to separate its cryptocurrency exchange operations from its other business divisions.

The Bithumb spokesperson said its “goal” was to wrap up its IPO by “the end of next year.”

The exchange had previously targeted a launch on the domestic Korea Exchange. But it has since scrapped this plan in favor of a NASDAQ bid.

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