South Korean Police Question Upbit and Bithumb Execs Over Lawmaker’s Hiring and Favoritism Allegations
Seoul police have summoned former Dunamu (Upbit) CEO Lee Seok-woo and multiple Bithumb officials as witnesses in an expanding probe of independent lawmaker Kim Byung-kee. Authorities are investigating allegations that Kim sought a job for his son after a November 2024 dinner with exchange executives, and when that failed arranged a six-month position at Bithumb beginning January 2025. Media and investigators cite claims that Kim pressured aides to ‘attack’ Dunamu, repeatedly questioned Upbit in parliamentary sessions, and highlighted perceived Upbit dominance and roughly 700,000 KYC irregularities flagged by the FIU. Earlier stages of the inquiry included questioning of Bithumb executives and a formal complaint filed in January 2025. Separately, the Financial Services Commission is considering an ownership cap of roughly 15–20% on major crypto-exchange shareholders under the next phase of the Digital Asset Basic Act; exchanges and some lawmakers warn such limits could hinder industry growth. Key figures: Lee Seok-woo (ex-Dunamu CEO), Kim Byung-kee (lawmaker), Song Chi-hyung (Dunamu chairman), Cha Myung-hoo (Coinone founder). Implications for traders: heightened regulatory scrutiny and potential governance/ownership rule changes increase political and operational risk for major Korean exchanges, which may raise volatility and undermine investor confidence in the near term; markets have shown limited immediate reaction but sustained legal and regulatory pressure could affect trading volumes and liquidity on Korean platforms.
Neutral
The investigation and related political allegations increase regulatory and governance risk around major South Korean exchanges, which is likely to raise short-term uncertainty and could reduce investor confidence. However, there is no direct allegation of fraud or insolvency at Upbit or Bithumb in the published reports, and market trading volumes have shown limited immediate disruption. Proposed ownership caps (15–20%) are a longer-term structural regulatory change that could affect exchange valuation and strategic ownership but would not directly change token fundamentals. Therefore, for tokens traded on these platforms (and the exchanges themselves), expect near-term heightened volatility and cautious liquidity — not an immediate sustained price collapse or rally. This justifies a neutral market view: downside risk from regulatory/political fallout balanced by the absence of evidence of exchange failure or systemic market impact so far.