Bithumb dismisses concerns over fraud case
Bithumb, South Korea’s second largest cryptocurrency exchange by trading volume, on Friday ignored questions about a fraud case involving a major shareholder.
Lee Jung-hoon, former chairman of Bithumb Korea – the operator of the crypto exchange Bithumb and Bithumb Holdings, which controls Bithumb Korea – is currently under investigation in connection with allegations of fraud. Due to a very complicated corporate structure, Lee would own a 65% stake in Bithumb Korea.
In October 2018, Lee reportedly sold an unlisted coin called BXA to investors, promising an initial BXA coin offer on Bithumb. But BXA’s listing never materialized.
Bithumb said Lee was no longer involved in running the business.
“There are looming concerns about the stability of the company’s operations and whether it will pass the company’s registration with the financial authorities due to the fraud lawsuits against the de facto owner,” Bithumb said. in a press release on Friday. “Bithumb is unrelated to the BXA affair in which a certain shareholder is involved.”
Market watchers have said the fraud case could take a toll on the stock exchange, which is preparing to register with financial regulators under the new anti-money laundering law. One of the conditions for registration is the use of real name accounts with local banks before September 24.
Bithumb currently has a partnership with NH Nonghyup which must be renewed every six months. But that could change now that the Korean Federation of Banks recently presented a list of recommendations to its members on how to check the strength of crypto exchanges. The banking association asked its members to check a company’s credit rating, whether it has a history of embezzlement or fraud allegations against any of its officers or employees, and whether it has any history of external hacking, continuous net loss or suspension of operations.
On Friday, Bithumb also apologized for the repeated delays affecting its servers.
As local crypto exchanges faced an increase in transactions and influxes of new users in the first quarter, a growing number of server errors and delayed transactions angered users.
“We will do our best to prevent the connection delays which have caused inconvenience to our customers from recurring,” the company said. “We extended the servers at dawn on May 21 to address these issues.”
By Park Ga-young ([email protected])