South Korean Crypto Exchange Bithumb Raided Over Ex-CEO’s Use of Funds

South Korean authorities have launched an investigation into local cryptocurrency exchange Bithumb, adding to the firm’s legal problems.

Law enforcement executed a search and seizure at Bithumb’s headquarters in Seoul in connection with the investigation, South Korean newspaper Chosun Daily reported Wednesday, citing a statement from the Seoul Southern District Prosecutors’ Office. The case involves allegations that former Bithumb CEO and advisor Kim Dae-sik used company funds to pay a $2 million security deposit for his personal apartment rental.

Bithumb did not immediately reply to Decrypt’s request for comment sent outside of South Korean business hours.

The company commented on the investigation to Chosun Daily on Wednesday. 

“Some of the suspicions are true, and immediately after the Financial Supervisory Service’s investigation, advisor Kim repaid all of the funds he had borrowed from a large company to purchase an apartment,” a Bithumb representative told the publication. 

Founded in 2014, Bithumb quickly amassed a strong following in South Korea, with the firm accounting for roughly 90% of market share by trading volume at one point, according to local English-language newspaper Korea Times.

But in recent years, a flurry of tax evasion probes and fraud allegations against the firm’s senior leaders have raised concerns about the company’s business practices.

Bithumb has since undergone a restructuring, and it is moving forward with plans to launch an IPO and increase its market share. This latest scandal, however, threatens to complicate its bid to secure a listing on the Nasdaq stock exchange. 

South Korea is one of the largest markets for crypto trading. Nearly 15% of its population is registered with a crypto exchange, Bloomberg reported in December. Meanwhile, crypto trading in the country eclipsed that of stocks late last year, according to the publication.

Edited by James Rubin