Bithumb, which is known as the largest exchange of cryptocurrency in South Korea, is facing more troubles in recent times. It was under the scanner since the last few weeks and reports are coming in that it is facing raids of police in Seoul. The exchange is functional since long and also has got a huge reputation in the market of this virtual currency.
On September 7th, local news publications reported that the headquarters of Bithumb in Gangnam District was raided by the Seoul Metropolitan Police Agency and they searched the premises and even seized some documents. As per the experts, documents are related to a few of the transactions that took place recently. However, more details are yet not received.
This is the second time that police are raiding the Bithumb office in a week, and the police officials informed that the latest raids were to secure additional evidence against the chairman of Bithumb board. The exchange is active in the trading of cryptocurrency where the role of a few officials is under scanning and to be sure about the genuineness more search is being done.
There are many allegations against Lee Jung Hoon who is the chairman of the board at the Korean office of Bithumb and also heads the Bithumb Holdings. The acquisitions include several financial frauds involving BXA token, which is promoted as the native token of Bithumb. Even as the BXA token was never launched, it was promoted by Jung Hoon, and this allegedly involved a high scale fraud that caused damages to the tune of $25 million to investors. The native token was also not listed yet in the exchange. All these controversies indicate some big scam that may be disclosed in the coming some days.
Apart from the ongoing investigations, Bithumb is also facing troubles with the data breach incident of 2017. The District Court of Seoul Central has ruled that the company was responsible to some extent for the leak of data incident and the judgment was given in September this year. Troubles started mounting for the company since then, and the Seoul Police conducted their first raid on the Bithumb office on the 2nd of September this year.
Bithumb has so far not responded to media queries, and the interesting thing is that it has also not denied the allegations even though the company officials have not confirmed it. It would be interesting to see how they plan to move ahead with their future plans after all these troubles. One thing is certain that a lot of damage has been done to its reputation, and it would be difficult to get investor trust in the near future unless it does some major turnaround with its working process.
According to market experts, this has not affected the position of Bithumb in the market as it still remains the crypto exchange which is ninth-largest across the globe. In terms of South Korean cryptocurrency markets, Bithumb is still the leading exchange. However, investor confidence has taken a hit with the allegations, and trading volumes were down by some percent in the last week.
Interestingly, Bithumb is not the only crypto exchange in South Korea that is under scrutiny by the police department. The Seoul police in late august had raided Coinbit for its involvement in fraud in the crypto market. Coinbit is also a well-known name in the crypto industry, and it is the third-largest cryptocurrency exchange in South Korea. The exchange is allegedly involved in market manipulation, and experts are of the opinion that they have generated an income of close to $85 million from such illegal activities.
As most of the new traders do not have enough expertise in handling the cryptocurrency markets, it has become very easy for exchanges and attackers to manipulate them in many ways. In some cases, even the authorities are also not having enough knowledge about how to tackle certain complaints as they are not tech-savvy in many countries. Given the complex nature of transactions associated with cryptocurrencies, it is difficult for law enforcement agencies to take timely action to prevent such illegal activities. It is up to the investors to exercise caution in such situations and deal with trusted and reliable exchanges in the long run. In this way, they can secure their investments and make good profits from investing in cryptocurrencies.
Bithumb started facing problems when two individuals claimed that the company was involved in a data breach and claimed compensation of $126000 and $38000 for the damages due to the data breach incident. The incident happened in 2017. According to the complaint received in this case, the individuals lost money due to a phishing attack, and this was due to the negligence of Bithumb.
The private data of the individuals were extracted from Bithumb after the attackers managed to hack Bithumb. This is common with many other financial institutions and exchanges have to be more careful when handling the private financial data of individuals. When they are not able to secure their private and confidential data, investors will also lose confidence, and it can affect their earnings in the long run.
The court said that the Bithumb exchange was partially guilty for this data breach and they could have done better by providing security to prevent such data breach incidents. The cybercriminal in this situation used the data given by the individual to Bithumb. He impersonated a customer center agent of Bithumb and managed to convince the individual that he needed a verification code sent to the phone to block suspicious access to his account.
Once the individual sent the details to the attacker, the ETH and XRP were converted to fiat, and the individual lost money during the process. After this, Bithumb did not have much controversy until the recent police raid on the office. The management of Bithumb has not given any clarification in this regard, and they did not respond to media queries about the incident. However, police officials have confirmed the raid, and this is done to collect additional evidence about the case.