South Korean police have summoned executives from the country’s largest crypto exchanges as part of an inquiry into alleged favoritism linked to independent lawmaker Kim Byung-kee, in a probe that could reverberate through the local crypto sector and intensify scrutiny of exchange governance.
What happened
- The Seoul Metropolitan Police Agency’s Public Crimes Investigation Unit reportedly called former Dunamu CEO Lee Seok-woo — Dunamu operates Upbit, South Korea’s biggest crypto exchange — and multiple Bithumb officials as witnesses in an investigation into allegations that Kim sought jobs and preferential treatment for his son.
- Local outlets say investigators questioned Lee about a November 2024 dinner meeting where Kim allegedly requested employment assistance for his second son. When a role at Dunamu did not materialize, the son is said to have been hired by Bithumb in January 2025 and worked there for roughly six months.
Allegations against the lawmaker
- Former aides of Kim, previously a Democratic Party floor leader, told reporters Kim had shown substantial interest in crypto firms including Dunamu and Bithumb as potential employers for his son. One former aide said Kim “originally tried to get him hired at ‘somewhere else,’ but when that fell through, he got him hired at Bithumb.”
- Reports also allege Kim instructed aides to “attack Bithumb’s competitors” after the November meeting — comments that purportedly included claims that “Dunamu’s monopoly is a complete problem.”
- During Political Affairs Committee sessions, Kim is accused of repeatedly questioning Dunamu in a manner prosecutors view as intended to cast the company in a negative light. He reportedly raised concerns with then-Financial Services Commission (FSC) chair Kim Byung-hwan about alleged monopoly issues and cited a Financial Intelligence Unit (FIU) probe that flagged nearly 700,000 instances in which Upbit allegedly failed to complete proper Know-Your-Client (KYC) procedures.
Further police action
- Seoul police have additionally summoned a Bithumb executive (on Tuesday) and another Bithumb official (on Wednesday) to question them about the lawmaker-related allegations, according to local media. Authorities are treating those called as witnesses in the inquiry.
Regulatory backdrop — ownership caps and industry pushback
- The investigation coincides with growing regulatory attention on exchange ownership. The FSC is reportedly considering a proposal to cap major shareholders’ stakes in crypto exchanges at roughly 15%–20% — a move FSC chairman Lee Eog-weon says aims to curb concentrated control and move beyond the current focus on anti-money laundering and investor protection.
- That potential cap has drawn sharp criticism from exchanges and some politicians. A joint council representing domestic exchanges, including Upbit, Bithumb and Coinone, opposes the measure, warning it could hinder the industry’s development. Members of the ruling Democratic Party have also expressed concerns that such caps might diverge from global regulatory norms and deter investment.
- If enacted, the ownership limit could force large-scale share sales by major stakeholders — for example, Dunamu chairman Song Chi-hyung and Coinone founder Cha Myung-hoo would likely need to reduce their holdings substantially.
What’s next
- The police probe into the alleged favoritism remains underway, and the findings could influence public and regulatory attitudes toward the crypto industry in South Korea. At the same time, the proposed ownership cap is expected to be folded into the upcoming Digital Asset Basic Act (the so-called second phase of the Virtual Asset User Protection Act), which would establish a more comprehensive legal framework for the sector.
Why it matters
- The case highlights potential conflicts between political influence and corporate governance in South Korea’s fast-growing crypto market, at a moment when regulators are debating structural changes intended to increase transparency and limit concentrated control. Outcomes from both the police investigation and the pending regulations could reshape how exchanges operate and are owned in one of Asia’s most active crypto hubs.
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