Over the past few days, South Korean prosecutors have been seeking the arrest of Kang Jong-hyun, the de-facto owner of Bithumb. Kang and two other executives were charged with embezzlement, breach of trust, and fraudulent illegal transactions under the Capital Markets Act, i.e. stock manipulation in this case.
On Thursday, local news outlet JTBC revealed that prosecutors have arrested Kang. The report noted,
“Kang is accused of conspiring with a business partner to manipulate stock prices and stealing 60 billion won [$48.6 million] from his company.“
Kang Jong-hyun is the elder brother of Kang Ji-yeon, the head of Bithumb affiliate Inbiogen. The said firm holds the largest share [34.2%] in Vidente Co., the biggest shareholder of Bithumb. The siblings reportedly conspired to pocket corporate funds and influence the stock prices of Inbiogen and video production firm Bucket Studio by issuing convertible bonds.
The other side of the coin
In a letter to shareholders posted on Bucket Studio’s official website, Kang Ji-yeon said,
“Most of the suspicions surrounding my older brother Kang Jong-hyun… are one-sided claims without fact-checking.”
He further stressed that the truth will be revealed during the investigation.” In the letter, Kang Ji-yeon also said,
“In addition, we can confidently say that there are no problems with embezzlement or breach of trust within the company.”
The executive also promised that everyone involved will “faithfully cooperate” with the prosecution’s investigation pertaining to the allegations that have risen.
Vindete Co.’s largest shareholder, Park Mo, was found dead in front of his house in Seoul in December 2022. Park was also under investigation on charges of embezzlement and stock price manipulation.
Over the past year, market participants’ trust with respect to crypto companies, especially exchanges and lending platforms, has eroded away. The back to back crashes of well-established names played a major role in instilling the pessimistic sentiment. The new year did bring in some new hope, but events like this, are bound to dent the sentiment again.
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