Prosecutors allege Bithumb’s former CEO used a $2 million company lease deposit to buy an apartment, though the exchange says he repaid the funds.

South Korean prosecutors raided crypto exchange Bithumb following suspicions that its former CEO embezzled funds to purchase an apartment. On March 20, Seoul’s Southern District Prosecutors’ Office reportedly searched Bithumb’s offices in the country.

The investigation centered around allegations that the crypto exchange gave a 3 billion Korean won (over $2 million) apartment lease deposit to Kim Dae-sik, its former CEO and board member, who now works as an adviser to the firm.

The investigation centered around allegations that the crypto exchange gave a 3 billion Korean won (over $2 million) apartment lease deposit to Kim Dae-sik, its former CEO and board member, who now works as an adviser to the firm.

Bithumb Says its Former CEO Repaid Funds.

Local media outlet YTN reported that the country’s Financial Supervisory Service (FSS) had previously investigated the suspicions and handed their findings to the prosecutor’s office.

In an interview with The Chosun Daily, a Bithumb representative said some of the allegations are true. Moreover the exchange said the executive took a loan from a lender immediately after the FSS investigation. After this, Bithumb said Kim repaid the funds spent on the apartment purchase in full.

Apart from the apartment, rumors that projects paid intermediary fees to get listed in Bithumb also circulated online. Citing anonymous sources, Wu Blockchain reported on March 20 that two projects claimed to have paid $2 million and $10 million, respectively, to get listed on Bithumb and Upbit.

The report claimed that the “intermediaries” were related to Upbit’s shareholders and market makers. Wu Blockchain also said that some intermediary fees ranged from 3% to 5% of entire token supplies.

Upbit Demands Evidence

Upbit responded to Wu Blockchain’s claims, asking her to “clearly disclose the list of digital asset projects that have paid the brokerage fees mentioned in X and provide specific evidence and data to ensure that our fact-finding and investigation proceed smoothly.”

Additionally, the exchange demanded additional information on the accusation of conducting illegal brokerage activities through intermediaries.

The investigation comes as the crypto exchange attempts another push to go public. On March 18, the Business Post reported that Bithumb CEO Lee Jae-won is expediting the process of the company’s long-awaited initial public offering (IPO). The report said the company has reorganized to eliminate judicial risks on major shareholders.