Former Bithumb president indicted in South Korea amid fraud allegations and false promises
South Korean digital asset exchange Bithumb is making headlines again for all the wrong reasons this week. Seoul prosecutors have indicted former Bithumb Holdings chairman Lee Jung-hoon with fraud charges over a $ 100 million trade deal gone awry. Meanwhile, a former partner involved in plans to set up a subsidiary in Thailand is suing Bithumb’s Hong Kong entities, saying the company has never seriously considered setting up new operations.
The cases offer insight into an industry that has often turned empty promises and hype into billions of dollars, and the behind-the-scenes deals that drive exchanges to make key business decisions.
Lee, prosecutors allege, wanted the equivalent of $ 100 million in “contract fees” from Kim Byeong-gun, chairman of Korean group BK. The fees were said to have been a payment for Lee’s efforts to aid Kim’s acquisition of Bithumb Holdings itself, using part of the proceeds from the presales and eventual listing of the BXA token.
They claim that Lee never planned to list the token, using the token’s pre-listing promise and sales as a cash grab. Kim backed out of the deal after worrying about the sums of money involved. BXA investors also sued Lee and Kim together, but South Korean authorities dropped the charges against Kim and said he was also one of Lee’s victims.
civil suit in Thailand
At the same time, Bithumb’s former partner in Thailand has launched a civil action against Bithumb’s Hong Kong subsidiaries, Bithumb Global Holdings (BGH) and GBEX, after Bithumb withdrew from plans to open a Thai partner exchange. The partner also claims that Bithumb made empty promises regarding its plans to expand globally and used the hype to sell BXA tokens to investors. Once it decided not to list BXA on its platform, the company canceled its planned Thai operation.
The plaintiff allegedly said that the time it took for the Seoul police to take action against those involved was a reason to initiate a prosecution.
BXA, which stands for Blockchain Exchange Alliance, was an effort to create fiat / payment gateways for a global network of exchanges, as well as other financial services. The BXA token itself was launched in February 2019 for 30 cents each. Its price then followed a pattern that was too similar to that of other digital assets, falling sharply amid high volatility before stagnating around the middle of this year. It is currently trading at around US $ 0.0012.
According to his website, “BXA is the majority shareholder of Bithumb and operates a global payments network that will be available in more than 12 countries including, but not limited to the United States, Japan, United Kingdom, Canada, Australia, New Zealand, Singapore, South Korea, Hong Kong, Thailand, Mexico and Peru.
He also adds: “Compliance is the key criterion for BXA. BXA sets the gold standard for regulatory compliance and lays a solid foundation for alliance members to establish local financial services entities around the world.
The links to the BXA white paper and other documents on the site seem to no longer work, and the project description contains very little detail otherwise.
BK Group, the BXA token issuer, has an interesting background for a digital asset operator: its initial booth for “Beauty Korea” and started life operating a chain of cosmetic surgery clinics in Seoul before expanding in other activities.
Trading and trading in tokens
These cases tell more about how digital asset exchanges make big bucks – by charging exorbitant ‘listing fees’ or other similar items that bring in millions of dollars to so-called projects. blockchain or tokens, or by promising partnerships that may or may not be serious.
Most cryptocurrencies and digital tokens are essentially worthless and lack real-world utility, but a listing on a major exchange can be a license to print money based on traders’ speculation. If project developers and / or exchange operators can increase enough hype to pump the price of an asset long enough, large holders can cash out hundreds or thousands of times their initial investments. Because of this, many project managers will bite the bullet and pay the cost, hoping it pays off and more.
Likewise, potential investors pre-selling a token are primarily drawn to the prospect of a stock market listing. Without a list, digital assets typically fail to achieve speculative value. The whole affair raises serious questions not only about individual blockchain projects, but also about the industry itself: what exactly is it selling and what is the end goal? Too often, events like the ones above detail the true nature of digital asset trading: a lot of hype, but little substance or real value.
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