Prosectors Seek 20-Year Prison Sentence for Bithumb Affiliate's Real Owner Over Stock Manipulation and Embezzlement

Prosecutors have demanded a 20-year prison sentence for Kang Jong-hyun, the real owner of a Bithumb affiliate who has been put on trial for alleged stock manipulation and embezzlement involving affiliates of the cryptocurrency exchange Bithumb.

The 12th Criminal Division of the Seoul Southern District Court, presided over by Judge Park Jong-yeol, held the sentencing hearing today (September 18) for Kang and five others indicted on charges including breach of trust and embezzlement under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, as well as fraudulent unfair transactions under the Capital Markets Act.

Prosecutors asked the court to sentence Kang to 20 years in prison, impose a fine of 150 billion won, and order the forfeiture of 18.1 billion won.

Explaining the reasoning behind the sentencing recommendation, prosecutors stated, "(Kang) is the principal culprit of this case, yet he refuses to acknowledge his major crimes. Furthermore, his conduct is grave, as he incited the destruction of evidence and the evasion of authorities during the investigation."

Won Young-sik, former chairman of Chor록baem Group, who was indicted alongside Kang on charges of participating in stock manipulation, faces a recommended 15-year prison sentence, a 30 billion won fine, and the forfeiture of approximately 2.4 billion won. Kang Ji-yeon, CEO of Bucket Studio and Kang's younger sister, faces a 7-year prison sentence.

Additionally, a 6-year prison term was sought for Cho, the CEO of an unlisted Bithumb affiliate, and a 5-year prison term was requested for another employee named Cho, who handled accounting duties under Kang's instructions.

A 5-year prison sentence was also demanded for another employee surnamed Kim.

During the final arguments, Kang's legal counsel argued, "Fraudulent unfair transactions must involve circumstances where there is a risk of misleading other investors' judgments and undermining market fairness. Judgments should focus on the impact on market fairness and reliability, but the prosecutors failed to address this and instead lumped together comprehensive factual relationships."

The defense also countered, "The defendant had no intent to commit a breach of trust or acquire illegal gains, and even if a breach of trust were established, the application of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes is impossible. Even if gains were acquired, the specific amount cannot be calculated, which precludes the application of the special act, and experts and witnesses have testified that the prosecutors' method of calculating damages is unreasonable."

Kang and his co-defendants were put on trial for allegedly embezzling 62.8 billion won from Bithumb affiliates between 2020 and September 2022.

They are also accused of generating 35 billion won in unfair profits through fraudulent unfair transactions—such as issuing convertible bonds (CBs) from Bithumb affiliates in 2021 and spreading positive rumors to inflate share prices—and causing losses to the company through breach of trust by transferring call options, which allowed the repurchase of CBs at low prices.

In connection with this, investigations revealed that ahead of a prosecution search and seizure in 2022, Kang instructed affiliate employees to destroy evidence and helped an employee who managed accounts under borrowed names go into hiding.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.