South Korean Prosecutors Raid Bithumb Exchange Over Former CEO’s Alleged $2 Million Embezzlement

South Korean Prosecutors Raid Bithumb Over Ex-CEO's Alleged Fund Misuse Amid IPO Plans

  • South Korean prosecutors raided cryptocurrency exchange Bithumb over allegations that its former CEO embezzled funds for a personal apartment purchase.
  • The exchange confirmed some allegations, stating the former CEO took a loan and has since fully repaid the funds following a Financial Supervisory Service investigation.
  • The raid comes amid Bithumb’s renewed push for an IPO in 2025, following years of failed attempts and recent corporate restructuring to eliminate judicial risks.

South Korean prosecutors executed a raid on cryptocurrency exchange Bithumb on March 20, investigating allegations that former CEO Kim Dae-sik misappropriated company funds exceeding $2 million to finance a personal apartment purchase. The Seoul Southern District Prosecutors’ Office searched the exchange’s offices following an inquiry initiated by the country’s Financial Supervisory Service (FSS).

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According to local media outlet YTN, prosecutors are examining a 3 billion Korean won (approximately $2 million) apartment lease deposit that Bithumb allegedly provided to Kim, who previously served as CEO and board member before transitioning to an advisory role with the company.

A Bithumb representative acknowledged partial truth to the allegations in communication with The Chosun Daily, stating: “The executive took a loan from a lender immediately after the FSS investigation. After this, Kim repaid the funds spent on the apartment purchase in full.”

Beyond the apartment scandal, additional controversy surrounds listing practices at Korean exchanges. Blockchain industry observer Wu Blockchain reported that cryptocurrency projects allegedly paid substantial “intermediary fees” to secure listings on Bithumb and Upbit. According to anonymous sources, these payments ranged from $2 million to $10 million, with some intermediaries reportedly connected to Upbit shareholders and market makers. Some projects purportedly allocated between 3% and 5% of their entire token supply for such arrangements.

The raid creates complications for Bithumb’s renewed initial public offering (IPO) efforts. On March 18, Business Post reported that current CEO Lee Jae-won is accelerating the company’s long-delayed public listing plans. The exchange has reportedly reorganized its structure to minimize judicial risks associated with major shareholders.

Bithumb’s IPO aspirations date back to 2020 but have faced numerous setbacks. In 2021, former board chairman Lee Jeong-hoon faced fraud charges, though he was subsequently acquitted by South Korea‘s Supreme Court. This legal resolution appears to have cleared a path for the exchange to pursue its public listing in 2025.

The company has taken concrete steps toward this goal, selecting an underwriter in 2023 and establishing a non-exchange business division in 2024 specifically to facilitate its stock market debut. However, these positive developments were offset by concerning financial performance, with the exchange operator reporting a 57% decline in annual revenue for fiscal year 2023.

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This investigation adds to a series of regulatory challenges faced by cryptocurrency exchanges in South Korea, a country known for its strict oversight of digital asset platforms and growing retail investor participation in cryptocurrency markets.

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