The South Korean crypto exchange Bithumb is facing another barrage of questions from regulators and parliamentarians over its ownership structure.
The exchange has claimed that it is doing its utmost to boost transparency in the matter, as it continues to target an initial public offering (IPO).
Bithumb ‘Owners’ Under Spotlight
The media outlet Newspim reported that attendees at an October 24 meeting of the National Assembly’s Political Affairs Committee “demanded” that the financial authorities step in.
The Financial Services Commission (FSC) has also announced that it will conduct its own “review” into the matter.
Bithumb’s ownership structure is mired in controversy and mystery. Two figures thought to own significant shareholdings in Bithumb-linked firms have been embroiled in protracted legal battles.
These include the reclusive and controversial Kang Jong-hyun, the reported “actual owner” of three firms with minority stakes in Bithumb.
Prosecutors have charged Kang with embezzlement and price manipulation linked to past altcoin listings on Bithumb.
They think Kang owns Vidente, a stock market-listed company that owns a 34.22% stake in Bithumb Holdings.
Former Bithumb CEO Remains a Concern for Regulators
Regulators and politicians are also concerned about former CEO Lee Jung-hoon, the largest shareholder of Bithumb Holdings.
Lee reportedly “controls Bithumb Holdings” through a series of minority share holdings in associated firms. He also has a 10% stake in Bithumb Holdings itself.
And Lee, too, is embroiled in a legal battle stemming back to a failed Bithumb sale to the BK cosmetic surgery group.
At the National Assembly meeting, Kwon Seong-dong of the People Power Party, said:
“There are issues with Bithumb, such as the fact that major shareholders are being tried on fraud charges, or have been arrested for embezzlement and stock price manipulation. These were all mentioned in a 2022 National Assembly audit. But it appears that the financial regulators still do not have a proper understanding of this matter.”
Bithumb trading volumes over the past 12 months. (Source: CoinGecko)FSC Wants New Powers
The FSC Chairman Kim Byung-hwan replied that he is currently powerless to act. But he added that the FSC is taking steps to address this.
“There is no basis under the current law to review major shareholders under the terms of the Specific Financial Information Act or the Virtual Asset User Protection Act [two crypto-specific laws]. Accordingly, I have submitted a bill to amend the Special Financial Information Act. That will let us conduct a review of [Bithumb’s] major shareholders.”
FSC Chairman Kim Byung-hwanBithumb launched in 2014. Its largest known shareholder is Bithumb Holdings, which owns a 73.56% stake in the platform.
A Bithumb official was quoted as stating that it had been “making efforts” to “overcome risks.”
Bithumb Owners and Exchange IPO Bid
The firm has already taken the decision to spin off its crypto exchange operations from its other business areas as it works toward becoming South Korea’s first stock exchange-listed platform.
The Bithumb spokesperson said its “goal” was to wrap up its IPO by “the end of next year.”
The exchange had previously targeted a launch on the domestic Korea Exchange. But it has since scrapped this plan in favor of a NASDAQ bid.
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