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South Korean Authorities Raid Upbit, Bithumb Crypto Exchanges after Political Scandal

May 16, 2023 South Korea BlockchainCrime & Legal

The raids came as a local lawmaker stepped down from politics amid accusations of allegedly selling millions in cryptocurrency before new laws were enforced.

Prosecutors in South Korea raided the offices of two local cryptocurrency exchanges due to investigations surrounding the digital assets of lawmaker Kim Nam-kuk.

According to a report from the South Korean news agency Yonhap, a team of prosecutors from the Seoul Southern District Prosecutors Office raided cryptocurrency exchanges Upbit and Bithumb for transaction records and other materials.

Kim is said to operate his digital asset wallets on Upbit and Bithumb.

The raid from authorities immediately followed Kim’s resignation from his political party on May 14. His departure is tied to several allegations against him due to allegedly suspicious crypto dealings while he worked on digital asset legislation in May and November of 2022.

According to a Facebook post from the former lawmaker, he did not want to “burden” his fellow party members with the controversy surrounding his crypto dealings. In the same post, he also said that the accusative media reports had “false facts” and that he would “reveal the truth.”

Suspicious activity

A May 8 report from The Korea Times reported that Kim liquidated over $4 million in crypto before the Financial Action Task Force enforced the “Travel Rule.” Kim is said to have backed a bill that would defer the 20% capital gains tax on cryptocurrencies from 2023 to 2025.

Kim reportedly claimed to have not cashed out his digital assets but rather to have transferred them to another exchange. The lawmaker said he was not obliged to report such activity.


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The South Korean politician is said to have owned approximately 800,000 Wemix coins in 2021 ($4.5 million), according to reports from Yonhap.

Crypto exchange controversy

Bithumb, one of the exchanges in which Kim allegedly had his funds, has been under close watch by local regulators in recent months.

In December 2022, the exchange’s biggest shareholder executive was found dead shortly after he was accused of embezzlement and stock price manipulation. Less than a month later, Bithumb was subject to a probe from regulators and had its offices raided on Jan. 10.

On Feb. 2., the owner of the exchange was arrested by South Korean authorities due to charges of embezzlement and a warrant for his arrest, which included additional charges of dereliction of duty, market manipulation and fraudulent transactions.

South Korean crackdown

All of these developments in South Korea come as authorities in the country have been cracking down on local crypto activity.

On April 24, the Bank of Korea — South Korea’s central bank — was granted the authority to open investigations on operators of cryptocurrency-related businesses. As a part of this new power, banks will be able to request access to crypto transaction data from exchanges operating in the country.

Two days later, legislators passed the initial review of cryptocurrency regulations proposals. These new regulations include relatively harsh sentencing recommendations and give the Financial Services Commission authority to both investigate and supervise any “digital asset”-related activity.

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