UPbit and Bithumb in the face of owner risks
Financial authorities have decided to take a closer look at cryptocurrency exchanges and UPbit and Bithumb, the two largest in South Korea, are drawing particular attention.
Each exchange must submit its business plan to the Korea Financial Intelligence Unit of the Financial Services Commission by September of this year and the plan must indicate whether an illegal act has been committed within five years by, for example, its principal shareholder, representative or manager. The special attention is due to the fact that the largest shareholders of the two exchanges are currently on trial and under investigation.
Dunamu founder Song Chi-hyung is the main shareholder of Dunamu, which runs UPbit, with a 25.4% stake and is an internal director of UPbit. He is currently on trial on allegations of fraud and forgery.
Former Bithumb Holdings chairman Lee Jung-hoon, who actually owns Bithumb, broke the law on aggravated sentences, etc. specific economic crimes, according to the prosecution. Bithumb is run by Bithumb Korea, Bithumb Holdings is Bithumb Korea’s largest shareholder, and the former chairman owns the cryptocurrency exchange through the holding company.
“The risks of owner and management cannot be separated,” said Hwang Se-woon, research analyst at the Korea Capital Market Institute, adding, “The largest shareholder, even without participation in management, strongly influences the Management decision-making by exercising its rights and a high level of governance transparency must be ensured in this regard.