South Korean Prosecutors Arrest Executive Linked to Crypto Exchange Bithumb: Report

Kang Jong-Hyun, who is reported by South Korean media to be a shareholder of crypto exchange Bithumb and exercise control over it, has been arrested on charges of embezzlement, breach of trust and fraudulent illegal transactions, CoinDesk Korea reported on Thursday.

South Korean prosecutors had sought Kang's arrest last week along with two other executives including his younger sister, Kang Ji-Yeon, the CEO of two publicly traded Bithumb affiliates, Inbiogen (101140) and Bucket Studio (066410), according to local reports.

Bithumb Korea distanced itself from Kang, who has also been identified as a former chairman of the exchange, saying he is connected to Vidente (121800), a publicly traded broadcasting equipment company that is a shareholder of Bithumb.

"Kang Jong-Hyun is not related to Bithumb Korea. Definitely, he was NOT the former chairman of Bithumb Korea. NEVER," the company's PR team said in an email. "We deny allegations and suspicions that he is our owner."

The arrests come during a turbulent period for Bithumb. On Thursday last week its offices were raided as part of an investigation into price manipulation of a coin listed on the exchange, Yonhap reported. Last month, the National Tax Service opened an investigation into possible tax evasion at Bithumb Holdings and its affiliates, and earlier in January former Chairman Lee Jung-Hoon was acquitted on charges that he committed a $100 million fraud connected to the exchange.

The investigation into Kang and the other executives is separate from the tax probe and centers around allegations that Kang and the others stole company money and conspired to manipulate stock prices.

Neither Kang Jong-Hyun nor his lawyers could not be reached for comment. CoinDesk has reached out to the Seoul Southern District Prosecutor’s Office for comment.

Bithumb is one of only five Korean crypto exchanges following a 2021 crackdown in which approximately 70 domestic exchanges closed after failing to meet regulatory requirements.

In December, Vidente Vice President Park Mo was found dead outside his home in South Korea after being named as a suspect in prosecutors’ investigation into the alleged embezzlement and stock manipulation. Local media reported that he took his own life.

Read More: South Korea to Start Tracking Crypto Transactions in Bid to Crack Down on Money Laundering

CORRECTION (Feb. 2, 12:53 UTC): Rewrites headline, first paragraph to remove media assertion of Kang's chairmanship following company statement; adds company statement, attempt to reach to prosecutor's office; clarifies Mo's connection to Bithumb in last paragraph.