Prosecutors reportedly seeking an 8-year jail term for Bithumb founder over $70 million fraud

South Korean prosecutors are reportedly seeking an eight-year jail sentence for the founder of the Bithumb crypto exchange in the ongoing $70 million fraud case. 

The prosecution has justified the request to have the founder, Lee Jung-hoon, imprisoned on the grounds that the damage inflicted was significant, South Korean outlet YNA reported on October 25. 

Lee, the de-facto owner of the exchange, is accused of stealing millions of dollars from Kim Byung Gun, chairman of BK Group, while working on the acquisition of Bithumb. Notably, they jointly registered the BTHMB consortium and were set to get a 50% stake in the exchange.

Court documents indicate that Kim paid Lee $100 million as a “contract fee” after reaching a deal to manage the exchange jointly following the acquisition. Furthermore, particulars of the deal required Lee to list the Bithumb Coin (BXA), which BK Group-linked Blockchain Exchange Alliance issued through Bithumb.

Failure to list BXA token

In this case, the funds generated through the potential listing were lined up to cover the remaining acquisition costs. Interestingly, the token was never listed, resulting in Kim pursuing legal action in 2020. As per the prosecution’s argument, Lee did not intend to list the token terming it as a play to defraud his partner. 

At the same time, victims who invested in BXA also sued Kim alongside Lee. However, Kim was not charged with authorities considering him a victim. 

“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. 

Furthermore, Lee’s lawyers stated that the deal was done in good faith by Kim and took legal action to avoid any criminal responsibility. The sentencing hearing is set for December 20.

Terra collapse case

It is worth noting that the Bithumb case is among the high-profile incidents facing the South Korean crypto scene. At the moment, investigators are looking into the collapse of the Terra (LUNA) ecosystem, focusing on founder Do Kwon. 

Notably, Kwon remains on the run after prosecutors issued a warrant against him for alleged fraud in the collapse.