Former Bithumb Chairman on Trial for Fraud Charges
U.S. virtual asset exchange FTX is reportedly in talks to acquire Bithumb, the second-largest virtual asset exchange in Korea. Yet, sources informed in the matter say that the deal may be hampered by legal risks involving Lee Jung-hoon, the former chairman of Bithumb Holdings who is on trial for fraud charges.
Lee is known as the real owner of Bithumb and was indicted by the prosecution last year for swindling US$100 million from Kim Byung-gun, chairman of BK Group and founder of a line of cosmetic surgery clinics, who wanted to acquire Bithumb Holdings.
Lee received US$100 million upfront as a “contract fee” from Kim, promising to list the BXA token on Bithumb. The BXA token is issued by the Blockchain Exchange Alliance, which was formed by Kim and a consortium affiliated with BK Group in December 2018.
Lee allegedly told Kim that he would be able to pay the remaining acquisition costs using money made through the BXA token listing. Yet the token was never listed on Bithumb. Consequently, BK Group failed to take over Bithumb as it failed to pay the balance. In response, Kim filed a complaint with the police against Lee in 2020 on charges of fraud. Lee faces the 12th trial on Sept. 9.
Bithumb has sought to find a new investor, but sales talks have been canceled several times due to the legal risks.
An official of Vidente, the largest shareholder of Bithumb, said that the company held talks with FTX regarding the disposal of stakes in Bithumb Korea and Bithumb Holdings. “As the negotiations are still going on, we can’t comment further on this matter and nothing has been fixed regarding the sale conditions or sale schedule," he said.
The legal risk involving Lee is known to have been the main reason for the repeated failures to sell Bithumb. Nexon, Naver, WeMade, JP Morgan, and Deutsche Bank have thus far been mentioned as potential buyers. Market watchers say that it remains to be seen whether the cryptocurrency exchange will be sold this time.