Bithumb

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.

Total crypto market cap rises above $1T, and data suggests more upside is in store

Bad news continues to dominate crypto media headlines but Bitcoin and the wider market appear to not care.

Despite the recent negative crypto and macroeconomic newsflow, the total cryptocurrency market capitalization broke above $1 trillion on Jan. 21. An encouraging sign is that derivatives metrics are not showing increased demand from bearish traders at the moment.

*Total crypto market cap in USD, 1-day. Source: TradingView*

Bitcoin (BTC) price gained 8% on the week, stabilizing near the $23,100 level at 18:00 UTC on Jan. 27 as the markets weighed the potential impact of Genesis Capital’s bankruptcy on Jan. 19.

One area of concern is Genesis Capital’s largest debtor is Digital Currency Group (DCG), which happens to be its parent company. Consequently, Grayscale funds management could be at risk, so investors are unsure if the Grayscale Bitcoin Trust (GBTC) assets could face liquidation. The investment vehicle currently holds over $14 billion worth of Bitcoin positions for its holders.

A United States appeals court is set to hear the arguments relating to Grayscale Investment’s lawsuit against the Securities and Exchange Commission (SEC) on March 8. The fund manager questioned the SEC’s decision to deny their asset-backed exchange-traded fund (ETF) launch.

Regulatory concerns also negatively impacted the markets after South Korean prosecutors requested an arrest warrant for Bithumb exchange owner Kang Jong-Hyun. On Jan. 25, the Financial Investigation 2nd Division of the Seoul Southern District Prosecutor’s Office sentenced Kang and two Bithumb executives on charges of conducting fraudulent illegal transactions.

The 7% weekly increase in total market capitalization was held back by Ether’s (ETH) 0.3% negative price move. Still, the bullish sentiment significantly impacted altcoins, with 11 of the top 80 coins gaining 18% or more in the period.

*Weekly winners and losers among the top 80 coins. Source: Messari*

Aptos (APT) gained 91% after the smart contract network total value locked (TVL) reached a record-high $58 million, fueled by PancakeSwap DEX.

Fantom (FTM) rallied 50% after the announcement of its new database system, Carmen, and a new Fantom Virtual Machine, Tosca.

Optimism (OP) faced 21% gains after a sharp increase in transaction volumes during an NFT incentive program called Optimism Quest.

Leverage demand slightly favors bulls

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Perpetual futures accumulated 7-day funding rate on Jan. 27. Source: Coinglass*

The 7-day funding rate was positive for Bitcoin and Ethereum, meaning the data points to slightly higher demand for leverage longs (buyers) versus shorts (sellers). Still, a 0.25% weekly funding cost is not enough to discourage leverage buyers.

Interestingly, Aptos was the only exception as the altcoin presented a negative 0.6% weekly funding cost — meaning short sellers were paying to keep their positions open. This movement can be explained by the 91% rally in 7 days and it suggests that sellers expect some sort of technical correction.

The options put/call ratio shows no signs of fear

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish. In contrast, a 1.40 indicator favors put options by 40%, which can be deemed bearish.

*BTC options volume put-to-call ratio. Source: laevitas.ch*

Even though Bitcoin’s price failed to break the $23,300 resistance, the demand for bullish call options has exceeded the neutral-to-bear puts since Jan. 6.

Presently, the put-to-call volume ratio stands near 0.50 as the options market is more strongly populated by neutral-to-bullish strategies, favoring call (buy) options by 50%.

Derivatives markets point to further upside potential

After the third consecutive week of gains, which totals 40% year-to-date when excluding stablecoins, there are no signs of demand from short sellers. More importantly, leverage indicators show bulls are not using excessive leverage.

Derivatives markets point to further upside potential and even if the market revisits the $950 billion market capitalization from Jan. 18, there is no reason for panic. Currently, Bitcoin option markets show whales and market makers favoring the neutral-to-bullish strategies.

Ultimately, the odds favor those betting that the $1 trillion total market cap will hold, opening room for further gains.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Total crypto market cap rises above $1T — data suggests more upside is in store

Bad news continues to dominate crypto media headlines, but Bitcoin and the broader market appear not to care.

Bitcoin (BTC) price gained 8% this week, stabilizing near the $23,100 level at 18:00 UTC on Jan. 27 as the markets weighed the potential impact of Genesis Global Capital’s bankruptcy on Jan. 19.

One area of concern is Genesis Capital’s largest debtor, the Digital Currency Group, its parent company. Consequently, Grayscale funds management could be at risk, with investors unsure if Grayscale Bitcoin Trust assets could face liquidation. The investment vehicle currently holds over $14 billion worth of Bitcoin positions for its holders.

Aptos (APT) gained 91% after the smart contract network total value locked reached a record-high $58 million, fueled by the PancakeSwap decentralized exchange.

Fantom (FTM) rallied 50% after the announcement of its new database system, Carmen and a new Fantom Virtual Machine, Tosca.

Optimism (OP) saw 21% gains after a sharp increase in transaction volumes during a nonfungible token incentive program called Optimism Quest.

Leverage demand slightly favors bulls

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

Interestingly, Aptos was the only exception as the altcoin presented a negative 0.6% weekly funding cost, with short sellers paying to keep their positions open. This movement can be explained by the 91% rally in seven days and it suggests that sellers expect some sort of technical correction.

The options put/call ratio shows no signs of fear

Even though Bitcoin’s price failed to break the $23,300 resistance, the demand for bullish call options has exceeded the neutral-to-bear puts since Jan. 6.

Presently, the put-to-call volume ratio stands near 0.50 as the options market is more strongly populated by neutral-to-bullish strategies, favoring call (buy) options by 50%.

Derivatives markets point to further upside potential

Derivatives markets point to further upside potential. Even if the market revisits the $950 billion market capitalization from Jan. 18, there is no reason for panic. Currently, Bitcoin option markets show whales and market makers favoring the neutral-to-bullish strategies.

Ultimately, the odds favor those betting that the $1 trillion total market cap will hold, opening room for further gains.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

South Korean prosecutors request arrest warrant for Bithumb owner: Report

One of the country’s largest crypto exchanges has fallen under investigators’ scrutiny over allegations of embezzlement by company executives.

According to local news outlet Infomax, South Korean prosecutors requested an arrest warrant on Jan. 25 for Kang Jong-Hyun, chairman and owner of cryptocurrency exchange Bithumb. Kang is wanted on allegations of embezzlement related to his activities at the exchange.

The same day, the Financial Investigation 2nd Division of the Seoul Southern District Prosecutor’s Office sentenced Kang and two Bithumb executives on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. The executives were also charged with conducting fraudulent illegal transactions under the Capital Markets Act.

Cointelegraph previously reported on Jan. 10 that Bithumb was placed under a “special tax investigation” by the country’s National Tax Service. Simultaneous to the incident, Kang is under investigation over his role in allegedly manipulating the stock prices of Bithumb affiliates Inbiogen and Bucket Studio through the issuance of convertible bonds. Vidente is currently the largest shareholder of Bithumb, with a 34.2% stake.

On Dec. 30, 2022, Bithumb’s largest shareholder, Park Mo, was found dead in front of his own home following investigations into his alleged role in embezzling funds from Bithumb-related companies. It is suspected that Mo may have taken his own life due to the nature of the criminal allegations brought against him.

Subsequent to the development, Lee Jung-Hoon, former chairman of Bithumb, was found not guilty of a $70 million fraud charge regarding his activities at Bithumb. The exchange is one of South Korea’s largest, with a 24-hour trade volume of $467 million.

Bithumb ordered to pay outage damages to investors by South Korean court

A ruling from local courts has Bithumb liable to pay just over $200,000 in damages to the 132 investors which filed against the cryptocurrency exchange.

The ongoing saga of the South Korean cryptocurrency exchange Bithumb continues, this time with ruling from local courts.

On Jan. 13, the South Korean Supreme Court finalized its ruling that the exchange must pay damages to investors over a 1.5-hour service outage on Nov. 12, 2017. According to a local news source, the damages are equivalent to $202,400 — 251.4 million in the regional currency won.

A district initially ruled against the investors, but it was later overturned. The finalized ruling from the Supreme Court ordered damages ranging from as little as $6 to around $6,400 be paid to the 132 investors involved.

The court’s final ruling stated that:

“The burden or the cost of technological failures should be shouldered by the service operator, not [the] service users who pay commission for the service.”

Bithumb is the country’s largest cryptocurrency exchange. The temporary outage came after the average amount of orders per hour suddenly doubled, bottle-necking transaction flows.

Investors who were seeking compensation claimed that cryptocurrencies such as Bitcoin Cash (BCH) and Ethereum Classic (ETC) had major falls during the outage.

Bithumb has been under tight watch from local authorities, with a fraud investigation against the former chair of the exchange and the sudden death of one of its largest shareholders after embezzlement claims.

It is now the subject of a “special tax investigation” being conducted by the country’s National Tax Service. Authorities exploring possibilities of tax evasion raided Bithumb headquarters on Jan. 10.

Regulators in South Korea also appear to be cracking down on the broader local crypto scene. Back in November, the country began investigating cryptocurrency exchanges for listing native tokens.

After the FTX scandal, the South Korean city of Busan announced that it is dropping global crypto exchanges from its plans of onboarding third-party digital exchanges.

Bithumb former chair Lee Jung-Hoon acquitted in the first instance

The former chair was under allegations of $70 million in fraud charges which were said to have occurred during the acquisition of Bithumb.

Lee Jung-hoon, the former chair of the South Korean cryptocurrency exchange Bithumb, was found not guilty on Jan. 3 by the 34th Division of the Criminal Agreement of the Seoul Central District Court.

Jung-Hoon was on trial under accusations of violating the Act on the Aggravated Punishment Of Specific Economic Crimes due to fraud.

The case has been ongoing since October 2018, when the former chairman allegedly defrauded 100 billion won ($70 million) during negotiations for the acquisition of Bithumb from Kim Byung-gun, chairman of the cosmetic surgery company BK Group.

Jung-hoon could’ve faced an eight-year sentence had he been found guilty. According to the local press, in its official response to the ruling, Bithumb said it respects the court’s decision.

The exchange also clarified that it is under “professional managers” and the former chairman is not involved in current operations.

Almost a week prior to the ruling, on Dec. 30, Bithumb’s largest shareholder executive, Park Mo, was found dead after he received allegations of embezzlement and manipulation of stock prices.

These developments followed a decision by Singaporean courts back in Aug. 2022, which found Byung-gun guilty of selling BXA tokens without the consent of Jung-hoon.

The ruling ordered him to return all proceeds from the sale of BXA back to the Singapore-based group BTHMB.

Later in October 2022, Jung-hoon failed to attend a parliamentary hearing during the Terra ecosystem turmoil, citing a mental health disorder.

Bithumb was one of the companies raided by South Korean authorities in the aftermath of the Terra Luna collapse.

After the collapse, exchanges in South Korea created an emergency system as a preventative measure in case of a feature Terra-style incident. To ensure compliance with local regulations, all local exchanges must now list tokens based on the same guidelines.

WEMIX token plunges 70% after it’s delisted by Korean exchanges

DAXA claimed that the circulating number of WEMIX exceeds what has been disclosed by Wemix, much to the chagrin of the issuers.

South Korea’s largest crypto exchanges have announced they will delist WEMIX (WEMIX) — the native token of gaming company Wemade’s blockchain platform Wemix — alleging the firm provided “false information” in response to an investment warning it was issued.

Bithumb, Upbeat, Coinone, Korbit and Gopax — which are part of a collective called the Digital Asset eXchange Alliance (DAXA) — announced on Nov. 24 that they would terminate contract support for WEMIX (WEMIX), with trading set to end on Dec. 8.

In the investment warning issued on Oct. 27, DAXA alleged that there was considerably more WEMIX in circulation than Wemix had disclosed, and Wemix had pledged to work with DAXA to alleviate these concerns.

After news of the decision to delist broke, WEMIX Communication released a statement, claiming it had sincerely responded to requests and concerns raised by DAXA and corrected a number of issues where they believe the circulating supply had been overstated the group, adding:

“The WEMIX team does not acknowledge or agree with the unreasonable decision made by the Digital Asset eXchange Alliance (DAXA)… It is crucial to note that the Foundation has not circulated a single WEMIX more than what we have officially disclosed thus far.”

The price of WEMIX plummeted following the news, and at the time of writing is down 70.8% with a current price of $0.476.

The CEO of Wemade, Henry Chang, has reportedly invested his monthly salary into the WEMIX token eight times, including purchasing 18,928 WEMIX Classic with an October salary this year.

Wemade is best known for its hit franchise The Legend of Mir, which peaked at over 200 million sign-ups and includes one of the world’s most popular blockchain games, Mir 4. It announced on Nov. 2 that it had raised $46 million from Microsoft, and asset management firms Kiwoom Securities and Shinhan Asset Management. Chang said at the time:

“Wemade and Wemix will continue to exert efforts to attract more capital and actively invest to build the global digital economy platform.”

Wemade also announced a plan to release a new economy platform that combines nonfungible tokens (NFTs) and decentralized autonomous organizations (DAOs).

While South Korea is one of the biggest gaming markets and blockchain adopters in the world, the country has banned play-to-earn blockchain games.

Since being elected on March 10 in a tight race, crypto-friendly President Yoon Suk-yeol has hinted that the ban could be lifted and is looking to grow the virtual asset market by overhauling “regulations that are far from reality and unreasonable.”

Bithumb ex-chairman could face 8 years prison over alleged $70M fraud

The sentencing hearing is set for Dec. 20 and could see the former chairman of South Korean crypto exchange Bithumb behind bars for a maximum of eight years if found guilty.

The former chairman of the South Korean cryptocurrency exchange Bithumb, Lee Jung-hoon, could face a possible maximum sentence of eight years in prison if found guilty on charges related to an alleged fraud worth $70 million.

Local prosecutors asked the Seoul District Court for the sentence on Oct. 25, with the sentencing hearing will be held on Dec. 20, according to a report from Yonhap News Agency.

It’s alleged that Jung-hoon defrauded $100 billion won or $70 million from Kim Byung Gun, chairman of the cosmetic surgery company BK Group in October 2018 during negotiations for Gun to purchase the Bithumb exchange.

Gun alleges he paid $70 million to Jung-hoon as a “down payment” toward buying the exchange on the condition that it lists a token called BXA created by the Blockchain Exchange Allicance, which Gun helped to form.

The proceeds from the token listing would’ve allegedly gone toward helping pay for the acquisition, but Bithumb never listed it and the deal fell apart.

“The structure of this case is a typical stock sale contract,” Jung-hoon’s lawyer reportedly said as a defense, adding that it was carried out faithfully according to typical procedures for such a contract.

Jung-hoon said in his final statement to the court that he was “very sorry for making it difficult for employees and causing social pressure.”

Earlier this month, Jung-hoon failed to attend a parliamentary hearing on Oct. 6 regarding the $40 billion wipeout of the Terra ecosystem citing a panic disorder as the reason for his absence.

Singapore court rules in favor of Bithumb founder in acquisition case

The decision on the civil lawsuit might affect a trial court in South Korea.

The court drama behind the acquisition of South Korean crypto exchange Bithumb has been going on for several years, but in an unexpected development, a Singapore court has made a ruling against Kim Byung-gun, who has originally accused the owner of Bithumb, Lee Jung-hoon, o defrauding him.

According to the South Korean publication Aju Daily, on FriAug. 26, after three years of proceedings, a court in Singapore found Kim guilty of selling BXA coins without the permission of his partner Lee and ordered him to return the proceeds gained from the sale of coins to Singapore-based consortium BTHMB.

The decision of this civil case might affect the trial court that has been held in South Korea. In that case, Kim accused Lee of defrauding him in the process of a jointly planned acquisition of Bithumb.

As his narrative goes, in October 2018, Lee Jung-hoon discussed the purchase and joint management of the Korean exchange with the chairman of BK Group and the founder of a line of cosmetic surgery clinics, Kim Byung-gun. ThPartners registered the BTHMB consortium to buy out a 50% stake in Bithumb Holdings — Lee reportedly received $100 million upfront as a “contract fee” from Kim, another part of the funds, demanded to close the acquisition, wshould have come from the sale of BXA coins issued by BTHMB.

Yet the token was never listed and the consortium didn’t take over Bithumb as it failed to pay the balance. Kim filed a complaint against Lee in a Korean court in 2020. But even beforehand, in 2019, Lee accused his ex-partner of selling BXA tokens on his behalf in Singaporean court.

Meanwhile, Bithumb casually continues its operation — in January 2022, it confirmed the development of a nonfungible token exchange that would help it stay competitive with Korbit and Upbit, two other domestic Korean exchanges. In July, the current owner of Bithumb, Koren company Vidente, revealed that it has contacted FTX on the subject of a possible sale of its stake.