Bithumb Faces Raid Amid CEO Embezzlement Allegations, IPO Plans Uncertain

South Korean prosecutors conducted a raid on the offices of Bithumb, a prominent cryptocurrency exchange, following allegations that the company's former CEO, Kim Dae-sik, embezzled approximately $2 million in company funds. The investigation, led by Seoul’s Southern District Prosecutors Office, focused on suspicions that Kim used a 3 billion Korean won (over $2 million) apartment lease deposit for personal gain. Prosecutors expressed concerns over potential financial misconduct within the company, particularly the misuse of funds for personal real estate purchases.

Bithumb has responded to these allegations, stating that Kim repaid the funds in full. According to a representative from the exchange, Kim took a loan from a lender immediately after the Financial Supervisory Service (FSS) investigation and subsequently repaid the amount spent on the apartment. This repayment was confirmed in an interview with a local news outlet, although the specific details of the repayment process were not disclosed.

The investigation into Bithumb comes at a critical time for the exchange, as it is actively pursuing an initial public offering (IPO). The company's CEO, Lee Jae-won, has been expediting the IPO process, which has been a long-standing goal for Bithumb. The exchange has undergone significant restructuring to mitigate judicial risks associated with its major shareholders. In 2021, the former board of directors chairman, Lee Jeong-hoon, was indicted on alleged fraud charges, although he was later acquitted by South Korea’s Supreme Court. This legal clearance has paved the way for Bithumb to accelerate its IPO plans, with expectations of a potential listing in 2025.

Bithumb's IPO aspirations date back to 2020, when the exchange began preparations for a stock market launch. However, the company faced numerous obstacles that delayed the process. In 2023, Bithumb chose an underwriter for its IPO plans, reigniting speculation about its intentions to go public. Despite these developments, the exchange reported a 57% loss in annual revenue for the fiscal year 2023, which could impact its IPO prospects. The company has since set up a non-exchange business to accelerate its debut on the stock market, demonstrating its commitment to achieving a successful IPO.

This investigation highlights the ongoing scrutiny faced by cryptocurrency exchanges, particularly those with ambitions to go public. The allegations against Kim Dae-sik underscore the importance of transparency and accountability within the industry. As Bithumb navigates these challenges, its ability to address these issues will be crucial in determining the success of its IPO plans. The company's efforts to restructure and mitigate risks indicate a proactive approach to resolving past issues and positioning itself for future growth. However, the financial losses reported in 2023 present a significant hurdle that Bithumb must overcome to regain investor confidence and achieve a successful public listing.