The court drama behind the acquisition of crypto exchange Bithumb has been going on for several years.
In an unexpected twist, South Korean prosecutors are reportedly seeking an eight-year jail sentence for Lee Jung-hoon, the de-facto owner of the country’s second-largest crypto exchange, in the ongoing $100 million fraud case, South Korean outlet YNA reported on October 25.
The prosecution has justified the request of BK Group Chairman Kim Byung-gun, who has originally accused Jung-hoon of defrauding him, on the grounds that the damage inflicted was significant .
The single-largest shareholder of Bithumb’s parent company is on trial for charges of fraud after BK Group dropped its plans to acquire the crypto exchange.
According to the prosecution, Lee allegedly took $100 million from Kim Byung-gun, the founder of a line of cosmetic surgery clinics, to buy out a 50% stake in Bithumb. The money was paid as a “contract fee” after reaching a deal to manage the exchange jointly following the acquisition alongside the promise to list a new token at the exchange.
Yet, the Bithumb Coin (BXA), which was issued by BK Group-linked Blockchain Exchange Alliance, was never listed and the consortium didn’t take over Bithumb as it failed to pay the balance. In 2019, Lee accused his ex-partner in Singaporean court of selling BXA tokens on his behalf. A year later, Kim filed a complaint against Lee in a Korean court.
“The structure of this case is a typical stock sale contract. Negotiations were held for 90 days, and both the defendant and Kim are experts, and lawyers from law firms were involved in both negotiations,” Lee’s lawyers argued.
However, the prosecution argued that Bithumb owner did not intend to list the token and described the agreement with Byung-gun as a play to defraud his partner. At the same time, victims who invested in BXA also sued both parties, but Kim evaded any sanction as authorities considered him a victim.
“The former Bithumb chairman submitted a written statement for his absence once again, even if he exudes enormous influence on the exchange as a major shareholder. He [Lee] cited health reasons and ongoing lawsuits, but he is scheduled to attend a trial the following day,” the legal notice states as reported by Korea Times.
Lee Jung-hoon and his associates have attempted to evade legal proceedings, citing health issues. However, a South Korean judge ordered him on Tuesday to show up in the court.
“The medical certificate he sent us shows that he needs to receive drug treatment for more than three months, but the diagnosis date was 19 months ago. I request the Assembly to proceed with bringing criminal charges against him for his shameless behavior (by not attending the audit),” the court papers show.
