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Bk Group Chairman and Bithumb Advisor Accused of Fraud

Byung-gun Kim and Junghoon Lee, the BK Group Chairman and key Bithumb Exchange advisor, respectively, have been formally accused of fraud in Seoul Central District Court, according to reports from the Prosecutors’ Office.

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Hong-Kong based Winguard Limited filed charges against the two parties on the 21st of last month for alleged violations of aggravated economic crimes, namely fraud. Kim and Lee did not make good on a contractual obligation to return on an investment from Winguard Limited.

In January of 2019, Winguard Limited offered the final funding needed for Kim and Lee to acquire Bithumb as an investment on the success of the acquisition. This means that it was an investment on the move that was expected to return a positive ROI. Winguard Limited secured 750 shares of the company after paying roughly $9mil to BTHMB Holdings on January 11th.

Kim Byung-gun, Chairman of BK Group and Lee Jung-hoon, Bithumb Advisor accused of fraud
Bithumb Holdings governance model

Winguard Limited had stated that they invested in the acquisition effort due to the fact that Kim and Lee had already secured about $350mil. As part of the deal, Kim and Lee agreed to pay back Winguard in full should the acquisition fail. That investment has not been paid back.

The acquisition of Bithumb failed because the final payment was not remitted by the deadline of September 30th of this year. Vident, one of Bithumb Holdings’ shareholders, pledged to acquire 2,324 shares of Bithumb Holdings’ shares from BTHMB Holdings for nearly 1 billion dollars. This led Vident to become the largest single shareholder of Bithumb Holdings.

Demonstrators demand retribution from Bithumb Korea in Seoul, November, 2019.

This continues the problems faced by Bithumb internal operators who are increasingly finding themselves in legal hot water for their involvement in the failed acquisition of Bithumb Exchange. Especially for Mr. Kim and Mr. Lee, who each are equal main shareholders of SK Brain Technology in Singapore, which has veto power in the operations of BTHMB Holdings and subsequently Bithumb Holdings, their road ahead is become far more bleak and uncertain.

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BXA and now Winguard now comprise two international complainants against Bithumb Exchange and all parent holding companies. Investors in BXA Token, the token once touted as the future native token on the Bithumb platform, have come up so short that their BXA Token holdings now account for a very small fraction of the initial investment they made, and feel betrayed. Their feelings won’t fill their pocketbooks however, so they will need to formulate a strong case in order to press charges as Winguard has now done.

For the sake of innocent shareholders and those trading mainly on Bithumb, hopefully this situation will come to an end with an amicable close.

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