According to local media reports, Kang Jong-Hyon, the real owner of Bithumb, one of the largest crypto exchanges in South Korea, was arrested on Thursday over the charges of embezzlement.
On January 25, the Seoul Southern District Court issued an arrest warrant for the businessman with multiple charges, including dereliction of duty, market manipulation, and fraudulent transactions.
Kang Jong-Hyon is 41 years old and is the elder brother of Kang Ji-Yeon, the head of Bithumb affiliate Inbiogen. The firm holds the largest share in Vidente Vidente, the biggest shareholder of Bithumb, with a 34.2% stake.
According to the prosecutors, the brothers conspired to embezzle corporate funds and manipulated the stock prices of Inbiogen and video production firm Bucket Studio through the issuance of convertible bonds. Later CEO Kang Ji-Yeon apologized to shareholders via a video and said the claims against his brother were “unconfirmed,” adding that he would cooperate with the authorities in the investigation.
On January 10, the National Tax Service (NTS) officials raided the exchange’s headquarters in Gangnam-gu, Seoul, the capital city, to investigate if the firm complied with tax regulations on cryptocurrency activity.
Reportedly, the Bithumb saga is much deeper than it appears. In late December, Park Mo, the largest shareholder of Bithumb, was found dead in front of his own home. He also underwent investigation amid allegations of embezzlement and market manipulation. It was suspected that Park Mo took his own life due to the charges brought against him.
Over the years, Bithumb has faced probes from authorities in numerous instances. In 2018, the NTS conducted a special tax investigation on this exchange and collected over 80 billion won ($64 million) in income tax.
Bithumb is the second-largest cryptocurrency exchange in South Korea by trading volume. It was also one of the country’s five fully licensed platforms following a crackdown on the industry in 2021, when approximately 70 domestic exchanges closed after failing to meet regulatory requirements.