arrest

Bithumb owner arrested in South Korea over alleged embezzlement

The net is closing in on Bithumb executives as the suspected real owner of the exchange is arrested.

The suspected real owner of South Korea’s largest crypto exchange, Bithumb, has been arrested on embezzlement charges.

According to local media reports, Kang Jong-hyun was arrested on Feb. 2 over the embezzlement allegations. The Seoul Southern District Court issued an arrest warrant for the businessman on Jan. 25 with multiple charges, including dereliction of duty, market manipulation and fraudulent transactions.

The 41-year-old is the elder brother of Kang Ji-yeon, the head of Bithumb affiliate Inbiogen. The firm holds the largest share in Vidente Vidente, which is the biggest shareholder of Bithumb with a 34.2% stake.

According to prosecutors, the brothers colluded to embezzle corporate funds and manipulate stock prices of Inbiogen and video production firm Bucket Studio through the issuance of convertible bonds.

In a notice on the Bucket Studio website, CEO Kang Ji-yeon apologized to shareholders and said the claims against his brother were “unconfirmed,” adding that he will cooperate with the authorities in the investigation.

*One of the few public photos of Kang Jong-Hyun. Source: Korea Post English*

On Jan. 10, Cointelegraph reported that the South Korean National Tax Service agency launched an investigation into South Korea’s largest crypto exchange. Investigators reportedly raided Bithumb’s Seoul headquarters as a part of the ongoing tax probe.

The saga goes even deeper, as Bithumb’s largest shareholder, Park Mo, was found dead in front of his own home in late December.

He was also subject to an investigation amid allegations of embezzlement and market manipulation. It was suspected that Park Mo took his own life due to the charges brought against him.

Bithumb has a 24-hour trading volume of $370 million, according to CoinGecko. Established in 2014, the exchange offers 191 coins and 287 trading pairs, with BTC/KRW the most popular.

Mango Markets exploiter arrested on fraud charges — Maybe it was illegal

The Mango Markets exploiter previously called his attack on the crypto exchange “legal open market actions.”

The crypto trader behind the $110 million exploit of decentralized exchange Mango Markets has been arrested in Puerto Rico — and charged with market manipulation and fraud.

According to a previously sealed complaint filed with the Southern District of New York and made public on Dec. 27, the Federal Bureau of Investigation (FBI) pinned Avraham Eisenberg with one count commodities fraud and one count of commodities manipulation in relation to his exploit of Mango Markets.

Eisenberg’s Oct. 11 exploit of Mango Markets worked by manipulating the value of the platform’s native token, MNGO, artificially inflating its price relative to USD Coin (USDC).

Eisenberg and his team then took out “massive loans” against its inflated collateral, which drained Mango’s treasury of around $110 million worth of various cryptocurrencies.

A day later on Oct. 12, Mango entered into negotiations with Eisenberg for the return of the funds.

Days later on Oct. 15, Mango Markets confirmed that $67 million in various crypto assets had been returned.

Eisenberg then publicly fessed up to exploiting the crypto exchange, stating that he was involved in a team that “operated a highly profitable trading strategy” and said that he believed all his actions were “legal open market actions.”

The FBI in its recent complaint stated the actions by Eisenberg constitute both fraud and market manipulation, as he “willfully and knowingly” engaged in a scheme involving the “intentional and artificial manipulation” of the price of perpetual futures on Mango Markets.

This ultimately allowed him to drain $110 million worth of cryptocurrencies — most of which came from the deposits of other Mango Markets investors.

“Due to [Eisenberg’s] withdrawals, other investors with deposits on Mango Markets lost much, or all, of those deposits,” explained FBI special agent Brandon Racz in the Dec. 23 complaint.

Racz said Eisenberg may have known his actions were illegal as well, as the day after the Mango Markets exploit, Eisenberg flew from the United States to Israel.

“Based on the timing of the flight, the travel appears to have been an effort to avoid apprehension by law enforcement in the immediate aftermath of the Market Manipulation Scheme,” he said.

Eisenberg was arrested on Dec. 26 in Puerto Rico, according to a filing from the United States Attorney Southern District of New York.

In November, Eisenberg tried his luck again, this time on decentralized finance (DeFi) protocol Aave, taking out a loan of 40 million CRV tokens from Aave and betting on a drop in price through a series of sophisticated short sales.

However, the plan ultimately didn’t succeed as the price actually rose during the attack, resulting in losses due to the significant short position.

Breaking: FTX founder Sam Bankman-Fried arrested, set to be extradited to US

Royal Bahamas police have arrested SBF at the request of the U.S. government, based on a sealed indictment.

Sam Bankman-Fried has been arrested by authorities in the Bahamas at the request of the U.S. government, just a day before the disgraced former FTX CEO was due to testify before Congress.

Bankman-Fried was arrested by the Royal Bahamas Police Force following a formal notification from the United States government that it has filed criminal charges against him, according to a Dec. 12 statement from the Bahamas Attorney General (AG) and Minister of Legal Affairs, Ryan Pinder.

Citing a person with knowledge of the matter, The New York Times reported on Dec. 12 that the charges against Bankman-Fried include wire and securities fraud, conspiracy to commit wire and securities fraud and money laundering,

The U.S. will likely request the extradition of Bankman-Fried, with Pinder stating that the Bahamas will “promptly” process any extradition request.

Bahamian Prime Minister Philip Davis said in a statement that both countries have “a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law.

A Dec. 12 tweet from the U.S. Attorney’s Office for the Southern District of New York said authorities in the Bahamas arrested Bankman-Fried based on a sealed indictment it filed that it plans to unseal “in the morning.”

USA Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time.

— US Attorney SDNY (@SDNYnews) December 12, 2022

Bloomberg reported on Dec. 10 that prosecutors from New York, FBI agents and regulators met with FTX’s lawyers to discuss the documentation that investigators want to obtain.

The U.S. Department of Justice (DOJ) was “closely” examining whether FTX improperly transferred hundreds of millions around the same time as the company declared bankruptcy on Nov. 11.

Bahamian authorities were similarly undertaking their own “active and ongoing” investigation into FTX as announced on Nov. 27 by Pinder that involved the country’s Securities Commission, the Financial Intelligence Unit and the police’s financial crimes unit.

Bankman-Fried’s arrest comes a day before he was expected to appear remotely to testify before the House Committee on Financial Services in a hearing investigating the collapse of the exchange.