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Photo courtesy of Bithumb |
[Alpha Biz= Paul Lee] The appellate court ruling on Lee Sang-jun, former chief executive of Bithumb Holdings, who exposed the long-suspected practice of illicit “listing solicitations” in South Korea’s cryptocurrency industry, is set to be delivered on February 2.
With the defendant already found guilty at the trial court level, industry observers believe the second-instance verdict could have significant implications for the ongoing legislative framework governing digital assets.
Amid recent moves by financial authorities to redefine cryptocurrency exchanges not as ordinary private companies but as “public infrastructure” subject to stricter oversight, a guilty verdict at the appellate level would further bolster the regulator’s policy stance, analysts say.
According to legal sources on February 1, the Seoul High Court’s Criminal Division 13 will deliver its appellate ruling at 2 p.m. on February 2 in the case involving Lee, who was indicted on charges of breach of trust and bribery. The case also involves businessman Kang, previously alleged to be Bithumb’s de facto owner, and Ahn, a former professional golfer, both of whom were deeply implicated in the scheme.
Prosecutors allege that in the second half of 2021, Lee accepted luxury goods worth tens of millions of won from Kang in exchange for an illicit request to list a specific cryptocurrency on the Bithumb exchange. Authorities argue that the defendants privatized the exchange’s internal listing review authority to extract improper gains.
In the first-instance ruling, the court sentenced Lee to two years in prison and ordered forfeiture of approximately KRW 50 million, while sentencing Ahn to four years and six months in prison for fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, placing him in immediate custody.
Both within and outside the industry, the case is widely viewed as a litmus test for the government’s long-standing argument that cryptocurrency exchanges function as quasi-public institutions.
Lee Eok-won, head of South Korea’s Financial Supervisory Service, recently stated at a public forum that “domestic won-based exchanges effectively operate in an oligopolistic market and perform public functions such as token listings and trade execution,” stressing that they should be treated as capital market infrastructure rather than simple private platforms, with governance and accountability standards to match.
In line with this view, authorities are reportedly considering measures in the drafting of the Digital Asset Framework Act that would cap major shareholder ownership in crypto exchanges at 15–20%, similar to alternative trading systems, and introduce fit-and-proper tests for controlling shareholders. The aim is to bar shareholders implicated in crimes or social controversies from management roles and restrict their voting rights, as is the case with banks and the Korea Exchange.
Some industry watchers also note that tensions between Bithumb and regulators following last year’s crypto lending service controversy may be prompting authorities to closely monitor the outcome of this case.
If Lee’s conviction is upheld on appeal, regulators’ argument that self-regulation alone is insufficient to ensure market transparency is likely to gain traction, strengthening the case for tighter statutory oversight of cryptocurrency exchanges.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
