The former chairman of Bithumb, Lee Jeong-hoon, was found not guilty during the first trial by the 34th Division of the Criminal Agreement of the Seoul Central District Court, according to local media reports on December 3rd.
Former chairman of Bithumb, Jeong-hoon, was accused of fraudulently obtaining a portion of the purchase price through the listing of BXA coins when the chairman of BK Medical Group, Kim Byung-geon, agreed to buy approximately 400 billion won worth of Bithumb in October 2018.
According to Bithumb, the former chairman, Jeong-hoon, has no connection to the company’s management. The company also expressed respect for the court’s decision and emphasized that it is currently being run by professional managers.
The case involving the former chairman of Bithumb, Jeong-hoon, has been ongoing since October 2018. He was accused of defrauding 100 billion won ($70 million) from the chairman of BK Medical Group, Byung-geon.
The strategy was for BTHMB and Chairman Byung-geon to sign a contract to become the major shareholders of Bithumb Holdings. In addition, the holding company for Bithumb Korea owns 74% of shares of Bithumb Holdings.
During the acquisition process, Chairman Byung-geon made a down payment. BTHMB created BXA coins with the intention that they may be used to finance a portion of the purchase price.
Jeong-hoon denies ever promising to go public, while Byung-geon maintains that he intended to raise the balance on his own. In July 2020, Chairman Byung-geon of BK Group filed a fraud complaint against the former chairman of Bithumb, Jeong-hoon, with the police.
The prosecution believes that Bithumb former chairman, Jeong-hoon, was involved in the issuance and sale of BXA coins. While Jeong-hoon’s side claims that Chairman Byung-geon’s side sold the BXA tokens independently.
Possible 8-year Sentence For Bithumb Former Chairman
If the former chairman of Bithumb, Jeong-hoon, is found guilty of the alleged $70 million fraud, he could face a maximum prison sentence of eight years.
As per Byung-geon, he paid $70 million to Jeong-hoon as a down payment for the purchase of the exchange. Therefore, the purpose of listing the BXA coin issued by Blockchain Exchange Alliance, of which Byung-geon was a member.
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It was reportedly planned that the proceeds from the token listing would be used to pay for the acquisition. However, the deal fell through when Bithumb did not list the token.
Per the reports, Jeong-hoon’s lawyer described the case as a “typical stock sale contract” and argued that it was carried out according to standard procedures for such contracts.