[2022 National Audit] Coin Manipulation Suspicion Amid Terra Incident... Coin Audit Loses Momentum Due to Key Figures' Absence

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] During the National Assembly's National Audit of the Financial Services Commission by the Political Affairs Committee, numerous issues piled up, including the Terra·Luna incident that accelerated the cryptocurrency market downturn, coin manipulation suspicions, and governance of cryptocurrency exchanges, but the atmosphere was dampened as key witnesses did not appear.

According to the related industry on the 7th, former Bithumb CEO Lee Jung-hoon ultimately did not show up at the Financial Services Commission audit venue the day before. Previously, Lee submitted a non-attendance statement on the 30th of last month citing health reasons such as being diagnosed with depression and panic disorder. Nevertheless, the Political Affairs Committee unanimously passed the issuance of a summons considering the purpose of the audit. However, when National Assembly Secretariat staff visited Lee’s residence but failed to meet him, they suspended the execution of the summons and decided to review whether to file a criminal complaint. Baek Hye-ryun, Chairperson of the Political Affairs Committee, explained, "Witness Lee Jung-hoon was not at home, and despite attempts to contact him through his company and family for two hours, he disappeared," adding, "We will decide on filing a criminal complaint after consulting with the ruling and opposition party floor leaders."

Min Byung-duk, a member of the Democratic Party of Korea, said, "The reason for non-attendance is absurd," and added, "He claimed he could not engage in normal activities such as meeting outsiders due to health reasons like depression and panic disorder, but he appeared as a defendant at the Seoul Central District Court criminal trial on the 4th and actively responded."

The ruling and opposition parties selected former CEO Lee as a witness regarding suspicions of manipulation of Arowana Coin and others. Arowana Coin was listed on the cryptocurrency exchange Bithumb in April last year, but within 30 minutes of trading support, the price of one coin surged from 50 won to 53,800 won, raising suspicions of price manipulation. Arowana Coin is a cryptocurrency usable on the digital gold platform Arowana. Hancom With invested in the Arowana Coin issuer through its Singapore subsidiary, and it is also called Hancom Token.

Additionally, during the audit the day before, harsh criticism was directed at the complex governance structure and major shareholder risks of Bithumb Korea, which operates the exchange Bithumb. Kim Sung-joo, a member of the Democratic Party of Korea, raised the possibility of a management dispute between the Initial line and former CEO Lee’s line, noting that Bithumb Korea’s governance structure flows from Bident → Inbiogen → Bucket Studio → Initial 1 & 2 Investment Associations.

At the audit the day before, Shin Hyun-sung, Chief of Chaiholdco, who was selected as a witness, also did not attend. He was identified as a key figure in the Terra·Luna incident that heated up the cryptocurrency market this year. Chief Shin co-founded Terraform Labs with CEO Kwon Do-hyung.

Chief Shin is known to have submitted a non-attendance statement on the grounds that his attendance could interfere with the prosecution’s investigation. After the Terra·Luna incident, he and CEO Kwon were reported by investors on charges including violations of the Act on the Aggravated Punishment of Specific Economic Crimes (fraud).

Representing Upbit, the top cryptocurrency exchange by market share, Song Chi-hyung, chairman of its operator Dunamu, was initially mentioned as a witness, but CEO Lee Seok-woo appeared instead. When asked during the audit about Upbit’s listing of Luna Coin, "They say it is not a self-listing, but since it was listed on overseas exchanges and automatically listed, is that why they say it is not a self-listing?" CEO Lee responded, "It can be said that there is a possibility of a conflict of interest." However, in subsequent questioning, he expressed doubts about the use of the term 'self-listing.'