South Korean Authorities Question Crypto Exchange Executives Over Lawmaker’s ‘Favoritism’ Controversy

South Korea’s police have reportedly summoned executives from the most important native crypto exchanges for questioning concerning allegations of favor-seeking and favoritism from a now-independent lawmaker.

Dunamu, Bithumb Executives Summoned By Police

On Wednesday, the Seoul Metropolitan Police Agency’s Public Crimes Investigation Unit known as former Dunamu CEO Lee Seok-woo and Bithumb officers as witnesses within the investigation of allegations towards impartial lawmaker Kim Byung-kee.

According to native reports, police reportedly questioned the previous CEO of Dunamu, the corporate that operates South Korea’s largest crypto alternate, Upbit, about whether or not Kim requested employment for his second son throughout a dinner assembly in November 2024.

Kim’s former aides have claimed that the previous Democratic Party’s flooring chief had proven important curiosity in crypto-related firms resembling Dunamu and Bithumb, the second-largest crypto alternate within the nation, for his son’s employment.

However, after failing to safe a spot on the native business chief, the lawmaker allegedly organized for his son to work at Bithumb, the place he labored for six months, beginning in January 2025. A former aide informed reporters in December that Kim had “initially tried to get him employed at ‘some place else,’ however when that fell via, he bought him employed at Bithumb.”

The reviews alleged that Kim had instructed his aides to “assault Bithumb’s rivals” after the assembly with former CEO Lee and a job opening at Bithumb in November. He seemingly affirmed that “Dunamu’s monopoly is a whole downside.”

The lawmaker has been accused of searching for to favor the crypto alternate his son labored for by repeatedly questioning Dunamu “in a way supposed to assault it” throughout Political Affairs Committee conferences.

Kim informed then-Financial Services Commission (FSC) Chairman Kim Byung-hwan that “the most important downside with Korea’s digital asset exchanges is the monopoly of a selected alternate,” the reviews famous. He additionally identified a Financial Intelligence Unit (FIU) investigation that identified practically 700,000 circumstances wherein Upbit didn’t comply with the correct Know-Your-Client (KYC) course of.

The Seoul Metropolitan Police additionally summoned a Bithumb government on Tuesday and one other Bithumb official on Wednesday for questions concerning the allegations towards the lawmaker.

FSC Explores Crypto Exchange Ownership Cap

The investigation comes because the FSC explores imposing a cap on crypto alternate possession. As reported by Bitcoinist, the monetary authority’s chairman, Lee Eog-weon, lately revealed that the company is reviewing a proposal to restrict main shareholders’ stakes in exchanges at round 15%-20%.

Lee pressured the necessity to restrict the possession stakes of controlling shareholders in crypto exchanges, highlighting that current laws primarily give attention to anti-money laundering and investor safety.

Nonetheless, the proposal has confronted backlash from business gamers and the ruling Democratic Party of Korea (DPK). According to native information shops, a joint council representing home crypto exchanges, together with Upbit, Bithumb, and Coinone, has opposed the cap.

Exchanges warned that the proposed restrict may hinder the development of South Korea’s crypto business. It’s price noting that if the regulation is enacted, main gamers like Dunamu’s chairman, Song Chi-hyung, and Coinone’s founder, Cha Myung-hoo, could be compelled to promote a big portion of their holdings to adjust to the possession restrict.

Meanwhile, members of the Democratic Party additionally expressed their considerations, affirming that related caps are unusual and will make South Korea’s framework inconsistent with world regulatory developments and uninviting to traders.

The alternate possession cap proposal could be included within the upcoming Digital Asset Basic Act, often known as the Second Phase of the Virtual Asset User Protection Act, which is able to function a complete framework for the complete crypto business.