South Korea Raids Bithumb Amid Ex-CEO's Alleged $2M Embezzlement

South Korean prosecutors have launched a raid on cryptocurrency exchange Bithumb as part of an investigation into allegations that its former CEO embezzled funds to purchase a luxury apartment. The move comes amid growing scrutiny over the crypto industry in South Korea, where regulators have been cracking down on exchanges accused of financial misconduct.

According to reports, Seoul's Southern District Prosecutors' Office searched Bithumb's offices in the country as part of an investigation into Kim Dae-sik, the exchange's former CEO and board member. The probe centers around allegations that Bithumb gave Kim a 3 billion Korean won (approximately $2 million) apartment lease deposit, which he then used to purchase a personal residence.

Bithumb has maintained that its former CEO repaid the funds spent on the apartment purchase in full, after taking out a loan from a lender following an investigation by the country's Financial Supervisory Service (FSS). However, prosecutors have raised concerns over potential financial misconduct within the company, suspecting that Kim may have used some of the funds for personal gain.

Furthermore, rumors have been circulating online about intermediary fees paid to get listed on Bithumb. A report by Wu Blockchain claimed that two projects allegedly paid $2 million and $10 million, respectively, to get listed on both Bithumb and Upbit. The report also stated that these "intermediaries" were related to Upbit's shareholders and market makers.

Upbit has responded to the allegations, demanding evidence of collecting listing fees from Wu Blockchain. The exchange has asked her to provide specific information about the digital asset projects that have paid brokerage fees and to ensure that their investigation proceeds smoothly.

The raid on Bithumb comes as the exchange is pushing forward with its plans for an initial public offering (IPO). In 2020, local media reported that Bithumb had been preparing for a stock market launch, but faced obstacles that prevented it from successfully conducting an IPO. However, in 2024, the company confirmed that it was working on conducting an IPO, despite announcing a significant loss in annual revenue.

Bithumb's CEO Lee Jae-won is reportedly expediting the process of the company's long-awaited IPO, with plans to speed up its listing in 2025. However, the investigation into Kim Dae-sik and Bithumb's alleged financial misconduct has cast a shadow over the exchange's IPO ambitions.

As South Korea's crypto industry continues to face growing scrutiny from regulators, the raid on Bithumb serves as a reminder of the need for greater transparency and accountability within the sector. The investigation into Kim Dae-sik and Bithumb will likely shed more light on the allegations of financial misconduct and have significant implications for the exchange's future plans.