The investigation into Bithumb’s financial dealings took a sharp turn this week after South Korean prosecutors revealed suspicions that a portion of company funds was improperly used by one of its former top executives for personal gain.
On March 20, the Seoul Southern District Prosecutors’ Office raided Bithumb’s offices, zeroing in on financial transactions involving former CEO and board member Kim Dae-sik.
Authorities allege that Bithumb provided Kim with a lease deposit worth approximately 3 billion Korean won (over $2 million), ostensibly linked to company operations.
However, prosecutors suspect Kim redirected some of these funds to purchase a private apartment—raising red flags over potential embezzlement and broader financial misconduct within the exchange.
Kim, who currently serves as an adviser to Bithumb, is under scrutiny as investigators comb through records to determine whether the exchange’s corporate funds were misappropriated for personal real estate investments.
The case forms part of a widening probe into governance lapses and financial irregularities at one of South Korea’s leading crypto platforms.
Bithumb Claims Former CEO Has Repaid All the Funds
While prosecutors continue their probe into allegations of financial misconduct, Bithumb has publicly responded to the claims, confirming certain details but asserting that corrective steps have been taken.
According to a statement provided to The Chosun Daily, a Bithumb spokesperson acknowledged that former CEO Kim Dae-sik did, in fact, receive company funds, which were later linked to a personal apartment transaction.
However, the exchange emphasized that after the country’s Financial Supervisory Service (FSS) initially flagged the irregularities, Kim secured a loan from an external lender to repay the funds in full. The findings from the FSS investigation were subsequently handed over to the prosecutor’s office, setting the stage for the current legal action.
Bithumb maintains that the financial discrepancy has since been rectified, though prosecutors remain focused on determining whether the original transfer of corporate funds constituted a broader violation of financial regulations and internal governance protocols.
“Some of the suspicions are true, and immediately after the Financial Supervisory Service’s investigation, Advisor Kim repaid all of the funds he had borrowed from a large company to purchase an apartment,” Bithumb said.
Bithumb’s IPO Ambitions Clouded by Ongoing Legal Scrutiny
The embezzlement probe into Bithumb’s former CEO comes at a particularly sensitive time for the exchange, as it accelerates plans for a long-anticipated initial public offering (IPO). According to recent reports from Business Post, Bithumb CEO Lee Jae-won has been actively working to fast-track the company’s IPO preparations, aiming for a public debut by 2025.
In an effort to smooth the path, Bithumb has undertaken internal restructuring, reportedly focused on minimizing judicial risks associated with its major shareholders—a move seen as essential to satisfy regulatory requirements and investor confidence ahead of the IPO.
Bithumb’s IPO ambitions date back as far as 2020, but legal entanglements have repeatedly delayed progress. A notable hurdle was the indictment of former board chairman Lee Jeong-hoon on fraud charges in 2021. However, Lee’s eventual acquittal by South Korea’s Supreme Court has reignited momentum for the exchange’s public listing.
Despite clearing some legal obstacles, Bithumb’s recent financial struggles may complicate its IPO efforts. In 2024, the company reorganized parts of its business structure specifically to facilitate the stock market launch.
However, this move coincided with a reported 57% year-over-year revenue decline in fiscal year 2023, raising fresh concerns about the exchange’s financial health as it seeks investor backing.
As regulatory scrutiny intensifies and financial performance pressures mount, Bithumb’s ability to balance compliance, governance, and growth will likely determine whether its IPO aspirations materialize.
Quick Facts:
- South Korean prosecutors raided Bithumb’s offices over suspicions that former CEO Kim Dae-sik misused over $2 million in company funds.
- Authorities allege Kim used the funds, initially provided as a lease deposit, to purchase a personal apartment.
- The investigation is part of a broader probe into allegations of financial misconduct and other governance issues at Bithumb.
- Bithumb is simultaneously pushing forward with IPO plans while addressing ongoing legal scrutiny.
