Court trial of former Bithumb chief ends with potential 8-year sentence

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Former chairman of South Korean firm Bithumb Holdings, Lee Jung-hoon, concluded a court trial on Tuesday. Prosecutors seek a total of eight years in prison on 100 billion won ($70.2 million) fraud charges.

A verdict will be announced on December 20, local news outlet Yonhap reports. Lee told the Seoul Central District Court he was “very sorry for making it difficult for employees and causing social pressure.”

Lee was indicted in July 2021 on suspicion of fraud. He allegedly took $100 million from cosmetic surgery tycoon Kim Byung Gun, chairman of conglomerate Beauty Korea (BK Group) and founder of the Blockchain Exchange Alliance.

The pair were negotiating Kim’s acquisition of Bithumb Holdings to the tune of $400 million for a 50% stake in the company. Lee asked for a $100 million upfront “contract fee.” In exchange, Kim was promised his blockchain organization’s token, BXA, would be listed on Bithumb’s crypto exchange.

Lee allegedly told Kim the remaining $300 million acquisition costs could be paid via making a profit from the BXA token listing. Kim could sell BXA tokens on Bithumb and then use that profit to cover the remaining aquisition costs.

In an August 2021 twitter thread, Protos detailed the allegations against Lee and the potential repercussions for Bithumb.

Read more: Upbit, Bithumb among Korean crypto exchanges hit in Terra fraud raid

Bithumb chairman claims Kim covered tracks

Lee gathered 8 billion won ($5.6 million) from over 50 other investors for BXA. After promising to list the token, he had even pre-sold 30 billion won ($21 million) worth of BXA tokens to investors.

The BXA token was never listed on Bithumb. These individuals sued both Lee and Kim for fraud in March and April 2020, but charges against the cosmetic surgery king were soon dropped. Prosecutors restated on Tuesday that they believe Kim was also a victim and that Lee never intended to list BXA but rather defraud Kim and investors. 

“The amount of damage is very large, and the damage is especially great for ordinary coin investors,” the prosecution said (translated from Korean).

However, Lee’s lawyer argued that Kim sued Lee in order to avoid criminal responsibility. “The structure of this case is a typical stock sale contract,” his lawyer stated. “The negotiation took place for 90 days.”

Following Lee’s arrest in 2021, he was released from custody for cooperating with police. Lee gave back $70 million of the $100 million he received from Kim. Impacted investors must now wait just shy of two months to learn of Lee’s fate in court.

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