Katherine Ross

An ongoing controversy concerning a South Korean lawmaker’s cryptocurrency holdings led to his resignation from his political party and raids of cryptocurrency exchanges.



Kim Nam-kuk resigned from the Minjoo party on Sunday, over a week after news broke that Kim <a href="https://blockworks.co/news/south-korea-token-investigation-politics">owned around $4.5 million</a> in wemix coins in 2021. His holdings had previously been reported on by various news outlets two years ago.&nbsp;



It’s unknown whether Kim had access to insider information that aided his investments, or if he was given free coins due to his political position.



“Reports to the effect that WeMade illegally supported Wemix or provided internal information related to investments to members of the National Assembly are completely untrue,” Wemix said in a blog <a href="https://medium.com/wemix-communication/%EB%8B%B9%EC%82%AC-%ED%97%88%EC%9C%84-%EC%82%AC%EC%8B%A4%EC%97%90-%EB%8C%80%ED%95%9C-%EB%8C%80%ED%91%9C%EC%9D%B4%EC%82%AC-%EB%AA%85%EC%9D%98-%EC%9E%85%EC%9E%A5-8eb3cbcfde9c">post</a>.&nbsp;



His current holdings, however, are currently unknown.



According to a <a href="https://en.yna.co.kr/view/AEN20230515008000320">report</a> from Yonhap News Agency, Korean prosecutors raided Upbit and Bithumb — which is where Kim allegedly has his digital wallets — on Monday in connection with an investigation into Kim.&nbsp;



The report alleges that transaction records were seized during the raids.&nbsp;



The scandal has also led to an internal investigation from the ruling political party into Kim after he was also accused of making crypto trades during sessions of parliament.&nbsp;



During his tenure as a politician, Kim voted in favor of regulatory legislation that would see some gaming money recognized as cryptocurrencies.&nbsp;



Kim’s crypto scandal comes as South Korea looks to regulate cryptocurrencies.&nbsp;



In January, National Assembly members were parsing through 17 proposals related to crypto, which ranged from increasing protections for South Korean crypto investors to reserve requirements.



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Lawmaker’s Crypto Scandal Leads to Upbit, Bithumb Raids

Bessie Liu

<div id="highlights-block_62dadf139649b" class="highlights">
 <ul>
 <li>Conversations about the acquisition have been ongoing for several months, according to Bloomberg</li>
 <li>Founded in South Korea in 2014, Bithumb has grown to become one of South Korea’s “big four” cryptocurrency exchanges</li>
 </ul>
 
</div>



Sam Bankman-Fried’s <a href="https://cms.blockworks.co/tag/ftx/" target="_blank" rel="noreferrer noopener">FTX</a> is looking to buy South Korean crypto exchange Bithumb, <a href="https://www.bloomberg.com/news/articles/2022-07-22/bankman-fried-s-ftx-said-in-talks-to-buy-south-korea-s-bithumb" target="_blank" rel="noreferrer noopener">according to Bloomberg</a>.



Acquisition talks have been ongoing for several months, a person familiar with the matter told the news outlet. There’s no word on Bithumb’s potential valuation.



The crypto bear market has given companies with larger cash reserves the perfect opportunity to acquire struggling competitors. FTX recently reached a <a href="https://cms.blockworks.co/ftx-reaches-deal-to-acquire-blockfi-for-up-to-240m/" target="_blank" rel="noreferrer noopener">deal</a> to acquire troubled lender <a href="https://cms.blockworks.co/tag/blockfi/" target="_blank" rel="noreferrer noopener">BlockFi</a> for up to $240 million and <a href="https://cms.blockworks.co/bankman-fried-belies-bear-bids-for-bitvo/" target="_blank" rel="noreferrer noopener">agreed to purchase Bitvo</a> and Embed Financial earlier in June. 



Alameda Research, another company founded by Bankman-Fried, also <a href="https://cms.blockworks.co/voyager-to-borrow-500m-from-alameda-amid-insolvency-rumors/" target="_blank" rel="noreferrer noopener">loaned $500 million</a> to bankrupt crypto lender <a href="https://cms.blockworks.co/tag/voyager/" target="_blank" rel="noreferrer noopener">Voyager</a>. Bankman-Fried is also Voyager&#8217;s single largest individual shareholder, holding 11% of the company. 



These moves further strengthen the rumor that Bankman-Fried is actively using the crypto market crash to <a href="https://cms.blockworks.co/sam-bankman-fried-out-to-win-whole-crypto-market-early-ftx-backer-says/" target="_blank" rel="noreferrer noopener">assert his dominance</a> in the industry.



Chris McCann, a general partner at early FTX investor Race Capital, <a href="https://www.bloomberg.com/news/articles/2022-07-19/sam-bankman-fried-expands-ftx-alameda-empire-by-bailing-out-failing-crypto-firm" target="_blank" rel="noreferrer noopener">told Bloomberg</a> that Bankman-Fried is “not doing this out of the goodness of his own heart,” claiming that at this point “his ambitions knows no bounds.”



Founded in South Korea in 2014, Bithumb has grown to become one of South Korea’s “big four” cryptocurrency exchanges, alongside Upbit, Coinone and Korbit. Reports of Bithumb being up for sale have <a href="https://cryptobriefing.com/largest-bitcoin-exchange-south-korea-bithumb-allegedly-sale/" target="_blank" rel="noreferrer noopener">circulated</a> since 2020, with the firm <a href="https://pulsenews.co.kr/view.php?sc=30800020&amp;year=2021&amp;no=551794" target="_blank" rel="noreferrer noopener">reportedly</a> valued at 1.27 trillion won ($969 million) last year.



It currently handles about $560 million in daily trade volume, according to CoinGecko data.



Bithumb’s former chair Lee Jung-hoon was indicted in July last year after he allegedly swindled $100 million from the chair of BK Group, Kim Byung Gun. Bithumb was also among several South Korean crypto exchanges that were <a href="https://cms.blockworks.co/7-south-korean-crypto-exchanges-raided-in-connection-with-terrausd-crash-report/" target="_blank" rel="noreferrer noopener">raided by local prosecutors</a> last week, following investigations into <a href="https://cms.blockworks.co/tag/Terra/" target="_blank" rel="noreferrer noopener">TerraUSD’s collapse</a>. 



An FTX spokesperson declined to comment. Bithumb did not respond to Blockworks’ request for comment by press time.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.