The former chair of Bithumb, Lee Jung-Hoon, was acquitted on charges of defrauding the business of $70 million during the acquisition of the South Korean crypto exchange.
The 34th Division of the Criminal Division of the Seoul Central District Court found Jung-Hoon not guilty under a first-instance verdict of violating the Act on the Aggravated Punishment of Specific Economic Crimes.
The court drama behind the acquisition of crypto exchange Bithumb has been going on for several years.
In an unexpected twist, South Korean prosecutors were 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.
Lee Jung-hoon and his associates have attempted to evade legal proceedings, citing health issues. However, a South Korean judge ordered him to show up in the court.