The Seoul Southern District Prosecutor's Office has arrested Kang Jong-hyun and another person identified as Cho on charges of breach of trust, embezzlement, and fraudulent transactions involving the cryptocurrency platform Bithumb and its affiliates.
According to local media JTBC and Newsis, prosecutors suspect that Kang Jong-hyun is the owner of Bithumb and its subsidiaries and that he conspired with his sister and another person identified as Cho to misappropriate company funds and manipulate stock prices.
A repeated investigation
Investigations revealed that Kang Ji-yeon is the CEO of companies Inbiogen and Bucket Studio, both affiliated with Bithumb. After unearthing this, the authorities discovered that the biotech firm, Inbiogen, is the largest shareholder in Vidente, while Bucket Studio is the majority owner of Inbiogen. This means that the income and funds of all these companies are not only linked to each other but could have been manipulated by Ji-Yeon, according to the South Korean authorities.
In October last year, prosecutors raided all three Bithumb subsidiaries and barred Kang Jong-hyun from leaving the country. Both brothers were summoned and investigated last month.
Kang Ji-yeon denied the allegations in a letter to shareholders, in which she stated that "the allegations surrounding my brother Kang Jong-hyun are unconfirmed and one-sided." The defendant also maintained "with confidence" that "there are no problems", referring to crimes related to embezzlement or breach of trust within the company that the South Korean prosecutor's office ensures.
The South Korean Prosecutor's Office has long sought the arrest of the Bithumb executives, but so far has not had sufficient evidence. Seoul authorities have long investigated the financial conduct of Bithumb executives for evidence, leading them to recently raid the cryptocurrency exchange's offices again, looking for any evidence of fraud or embezzlement.
The Bithumb executive accused the South Korean justice of abusing their power as they lacked sufficient evidence of the accusations. However, it seems that this did not help him much, since they have finally managed to arrest him, although it remains to be seen whether he really has committed the crimes of which he is accused.
Regulation in the cryptocurrency industry is increasing and South Korea is not giving up in its fight against financial misconduct. The case is still under investigation, and the prosecution refused to release the full names of the other people involved due to privacy laws in South Korea. The cryptocurrency community is waiting for additional results on the future of Bithumb and its relationship with Inbiogen and Bucket Studio, do you think they have committed the crimes? Or is it an abuse of power?