Amidst the national crackdown of cryptocurrency exchange platforms, the two largest firms, Upbit and Bithumb get raided on allegations of fraud and money laundering. South Korean lawmaker and politician Kim Nam-kuk had involvement in these organizations prior to the raid. However, with continued strikes on his public image, the parliament member resigned from his post.

Key Highlights:

  • The Seoul Southern District raided the offices of Upbit and Bithumb and collected vital documents.
  • Other than laundering allegations, evidence was collected for investigation on Kim Nam-kuk.
  • The politician is alleged to be involved in insider trading, saving himself 20% taxation from his capital gains.
  • Questions on the source of the $4.4 million investment by Kim are still unanswered. 

Behind the Raid of Upbit and Bithumb

South Korean prosecutors’ barge into Upbit and Bithumb, two of the largest local trading platforms for cryptocurrencies. Allegations were made on the organizations for fraudulent activity and illicit funds transfer. The Seoul Southern District led the raid and collected evidence such as transaction records and trade details.

Being the leaders of cryptocurrency exchange in South Korea, Upbit alone held a daily trading of $1.5 billion and lack of regulations raised several questions of business nature. Even though the organization has promised security of funds, the South Korean officials do not seem to buy it. For Bithumb, the scenario does not change much as they also have an approximately trading volume of $1 billion every day.

Both organizations were under close investigation but to gather further details, the officials came to the means of a raid. A local news agency, Yonhap, released a report on the incident and disclosed details about the political involvement of Representative Kim Nam-kuk.

Ties of Kim Nam-kuk with Cryptocurrencies

Yonhap also related the raid with Kim and his past investments in cryptocurrencies. Only in 2021, he was holding a total of 800,000 Wemix which was worth around 6 billion South Korean won or $4.4 million. Speculations rose back then about the origin of such high funds and using insider information for making trading choices.

Suspicions on Upbit and Bithumb are said to be fuelled by that incident which led to Kim facing judiciary bodies in May and November. The National Assembly identified that those two organizations were closely knit with the trading actions of Kim Nam-kuk.

On May 8, Korean Times published a report stating that Kim sold a significant part of his investments before “Travel Rule” came into action. Since the two incidents happened at such a close proximity, beliefs are on insider trading as just before the Financial Action Task Force took action, over $4 million worth of crypto were liquidated by the South Korean official. Due to this move, he got relaxation of 20% tax on his capital gains.

According to Kim Nam-kuk, his transactions were not liquidated but simply transferred to a different cryptocurrency exchange and it is not legally required to report it. He has maintained innocence ever since, but his social image took a severe blow, resulting in his resignation from his political party.

He wrote in his Facebook post:

“Today, I am briefly leaving the Democratic Party… it would not be right to be a burden to the party…”

About Aritra

Aritra is an experienced cryptocurrency analyst with a deep understanding of market shifts. His proficiency in identifying investment opportunities has helped him build a strong sense of the Web3 world. Aritra is a trader turned writer and presently predominates in the crypto writing industry as he can guide new investors as well. When he is not decoding crypto jargon, he can be found streaming on Twitch.

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