Prosecutors Seek Eight-Year Jail Term for Bitumb’s Ex-Chair Over $70M Fraud

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South Korean prosecutors have asked the court to sentence Lee Jung-hoon, the former chairman of cryptocurrency exchange Bithumb, to eight years in prison after being charged in a 100 billion won fraud case worth close to $70 million. 

Bithumb Ex-Chair Failed to Honor Acquisition Deal

According to local media, the case started in October 2018, after the former chair offered a business proposition to Singapore-based BK Group chairman Kim Mo to purchase Bithumb. Part of the acquisition plan included the creation of Bithumb Coin (BXA) and listing it on the exchange. 

However, Jung-hoon conducted a presell on the crypto asset after its issuance and sold $45 million worth of the assets to public investors. 

He also convinced the BK Group chair to purchase $25 million worth of BXA tokens as a down payment for the buyout, which he obliged. 

After purchasing a stake in the exchange, the company realized that Jung-hoon did not honor his part of the agreement by listing the token on Bithumb. BK Group’s acquisition of the business later failed.

Investors who participated in the presell sued Jung-hoon and Mo for deceiving them into investing in the assets.

Nevertheless, the South Korean authorities in charge of the investigation found the BK Group chairman not guilty, as he was also a victim of Jung-hoon’s deceit. 

Prosecutors Seek to Punish Jung-hoon

During a hearing today at the Seoul Central District Court, Jung-hoon’s legal counsel argued that the deal with BK Group should be treated as a stock sale contract. 

The lawyer further argued that the contract followed due protocol as required by the law, noting that the transaction lasted for 90 days. 

However, he stated that the BK Group chairman sued his client to exempt himself from the criminal responsibilities of the affected victims. 

Prosecutors have also asked the court to convict Jung-hoon of Fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. 

Authorities asked the court to give him an eight-year jail term, noting that he had committed an extensive offense.

“The amount of damage is very large, and the damage is especially great for ordinary coin investors,” the prosecutors said. 

Meanwhile, the former Bithumb chair appealed to the court and apologized to the employees impacted by his decision. 

A sentencing hearing is scheduled to be held on December 20. 

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