[비즈한국] Lee Jung-hoon, former Chairman of the Board at Bithumb Holdings and Bithumb Korea, who faced allegations of fraud worth 110 billion KRW related to the listing of the so-called "Bithumb Coin (BXA Token)," has been confirmed to have won a civil lawsuit filed against him by Kim Byung-gun, Chairman of BK Medical Group. With Lee having been acquitted of fraud charges in both the first and second trials of his criminal case and now winning this civil suit, he appears to be successfully shedding his judicial risks.
On September 6, the 20th Civil Division of the Seoul Central District Court (Presiding Judge Lee Se-ra) dismissed a 12 billion KRW damage suit filed by BK Medical Group Chairman Kim Byung-gun against Lee Jung-hoon. Chairman Kim had filed the suit seeking the return of 12 billion KRW, a portion of the payment made for the acquisition of Bithumb in September 2020, but lost in the first trial. Chairman Kim has appealed the decision.
In the lawsuit, Chairman Kim cited several alternative claims (where multiple grounds are argued, and if the court upholds one, others become unnecessary), including: △a claim for the return of unjust enrichment due to the cancellation or termination of the stock purchase agreement, △a claim for damages due to breach of contract, and △a claim for damages due to illegal acts. However, the court judged that the contract between the two parties was not unfair and dismissed all of Chairman Kim's claims.
Lee Jung-hoon, the founder and real owner of Bithumb, was accused of deceiving Chairman Kim during their joint management agreement by promising to list the BXA token, only to embezzle a 110 billion KRW deposit. While the prosecution demanded an 8-year prison sentence in October 2022 for fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, the former chairman was acquitted in both the first and second criminal trials. With the court ruling in his favor in this civil case as well, the likelihood of him being cleared of the fraud allegations has increased significantly.
The origins of the legal battle date back to 2018. In October 2018, Chairman Kim Byung-gun announced through the BK Global Consortium (corporate name BTHMB Holdings) that he would acquire Bithumb (Bithumb Holdings shares) for 350 million USD. At a press conference on December 27 of that year, Chairman Kim stated, "We have secured 100% of the acquisition funds," adding, "The BXA token is sold only overseas and will not be used for acquisition funds. The proceeds from the sales will be used for BXA mainnet development and ecosystem creation." He made these remarks to clarify suspicions that he was using funds from BXA token sales to pay for the acquisition.
However, Chairman Kim failed to pay the remainder of the acquisition funds and did not receive his deposit back. Although the Bithumb exchange teased the listing of the BXA token with an event in early January 2019, the listing was ultimately canceled as financial authorities signaled a stance against indirect cryptocurrency offerings (ICO) via overseas entities.
In July 2020, Chairman Kim sent a certification of contents to Lee, claiming that the contract was signed under "fraud and duress" and was therefore being canceled and terminated. In the meantime, as investors who had purchased BXA tokens in the belief that they would be listed began filing fraud complaints against both Lee and Kim, the investigation began.
The full story emerged during the ensuing police investigation and the legal battles between Kim and Lee. In court, Chairman Kim's side argued that there was an agreement that "they would each invest 25 million USD to hold joint management rights over the Bithumb exchange, and the remaining acquisition funds would be raised through BXA token sales or by attracting financial investors (FI). To this end, BXA tokens would be provided to Kim for free and listed on Bithumb for sale." Kim had claimed that Lee deceived him into signing the contract despite having no intention or ability to fulfill the agreement.
However, the civil court, like the criminal court, did not accept these claims. It noted there was no evidence that Lee had committed to listing the BXA token or that the remainder of the acquisition price would be paid through BXA sales. Furthermore, it concluded that while Lee and Bithumb did attempt to list the BXA token, they had no choice but to stop due to financial regulatory pressure and the need to maintain real-name verification deposit/withdrawal services with NongHyup Bank.
The court pointed out that the stock purchase agreement signed by both parties contained no wording regarding a guaranteed listing of the BXA token. Regarding the phrase in the contract, "Priority will be given to listing on global exchanges or the Bithumb exchange after BXA token issuance," the court ruled, "It is reasonable to interpret this as meaning that Lee could not legally bear the obligation of listing the coin, but would execute it as a priority as far as circumstances permitted."
The court also pointed out a lack of credibility in the statements regarding the BXA coin allocation method and the intended use of the sales proceeds. In particular, it noted that while Chairman Kim's side claimed in the criminal trial that "there were coins allocated to Kim aside from those for attracting FIs," they changed their story in the civil trial to claim that "the coins for FI recruitment and the coins allocated to Kim overlapped and could be used at Kim's discretion" after losing the criminal case.
In addition, the court cited the fact that while Chairman Kim stated in a December 2023 press conference that BXA tokens were not sold in Korea, it was revealed through investor complaints that this statement was false. The court viewed the fact that Bithumb and Lee's side learned belatedly about the sales to domestic investors as a factor that contributed to the cancellation of the token listing.
Meanwhile, as the possibility of Lee Jung-hoon escaping fraud charges increases, recovering damages for individual investors who suffered losses due to the cancellation of the BXA token listing has become difficult. Previously, following the acquittal in the first criminal trial, the civic group "Coalition for Liquidation of Judicial Evils" released a statement condemning the ruling, calling it a "verdict that ignores the pain and tears of the victims." Lee returned as a registered director of Bithumb Holdings on October 31, 2023, following his acquittal in the first criminal trial; attention is now focused on whether he will return to management in earnest once his judicial risks are fully resolved.