The former head of cryptocurrency exchange Bithumb could face imprisonment, and here’s why

According to South Korean news agency Yonhap, South Korean prosecutors are asking Lee Jong-hoon, the former head of cryptocurrency trading firm Bithumb, to serve up to eight years in prison for alleged fraud.

This fraud case involves selling Bithumb’s BXA tokens as part of Singapore-based BK Group’s bid to buy the cryptocurrency exchange in 2018. As part of the purchase, Lee sold $25 million worth of BXA tokens to BK Group. These coins were also sold to investors for around $45 million.

On the other hand, Bithumb BXA was not listed, which resulted in huge losses for investors. These investors have filed a fraud case against Lee and Kim Mu, president of BK Group.

Previously, South Korea’s investigative agency assessed that Kim had no case to answer. Investigators concluded that Kim was a victim like the others.

Kim Byung Joon, the group’s president, is also accused of the alleged fraud, but is reportedly not under police investigation. The summons comes on the heels of two recent police raids against Bithumb.

Kim’s shares in Bithumb were reportedly confiscated by the Seoul Central District Court on Wednesday. The reservation must be under the supervision of the accounting firm Samjong KPMG.

Verdict issued in mid-December

They are asking authorities to convict Lee of fraud under the country’s law on the death penalty for specific financial crimes. “The amount of damage is very large, and the damage is especially great for ordinary currency investors,” the prosecutor’s office said at a hearing before the Seoul Central District Court.

On the other hand, Lee’s defense argued that selling tokens follows a typical stock sale contract. The defense also argued that BK Group’s Kim was trying to avoid prosecution for his role in the BXA token sale disaster.

The court will hold its sentencing hearing on December 20.

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