South Korea Books Bithumb CEO in Bribery Probe as Japan Passes Crypto-as-Stocks Bill

Crypto News

South Korean police have booked Bithumb chief executive Lee Jae-won as a suspect in a widening bribery investigation, alleging the exchange hired the relative of a sitting lawmaker in exchange for political favors. Investigators say National Assembly member Kim Byung-ki, then seated on a committee overseeing financial regulation, requested the hiring during a November 2024 meeting in Seoul; the lawmaker’s son joined Bithumb in January 2025 and stayed roughly six months. Police have raided the exchange’s headquarters twice this year, most recently on June 8, as the probe into one of South Korea’s largest altcoin trading venues intensifies.

Japan’s House of Representatives has passed a sweeping bill that would reclassify crypto assets as financial instruments, moving oversight from the Payment Services Act to the Financial Instruments and Exchange Act. The Financial Services Agency framed the shift as recognition that digital assets have become a mainstream investment vehicle rather than a mere payment tool. Expected to take effect in 2027, the framework would subject tokens to lower taxes and stricter trading rules while opening the door to crypto exchange-traded funds. Officials said the changes aim to strengthen investor protection without stifling innovation across the country’s fast-growing blockchain sector.

The Japanese legislation introduces a stock-market-style insider trading ban, prohibiting company insiders and exchange employees from trading tokens while holding undisclosed material information such as a pending listing or delisting. It also mandates strict public disclosure rules requiring projects to detail their technology, supply, and finances, with a 2 million yen investment cap imposed on token sales that skip an independent audit. Penalties for operating an unregistered crypto business would jump from three years to ten years in prison, while the securities watchdog gains powers to launch criminal investigations and request asset freezes — a marked toughening of enforcement against bad actors.

Bithumb’s legal exposure extends well beyond the hiring scandal. South Korean regulators imposed a $24.5 million fine and a six-month partial business suspension in March over anti-money-laundering and know-your-customer deficiencies, an order a court temporarily blocked in late April after the exchange challenged it. The lawmaker at the center of the case, Kim, faces 13 separate suspicions including nomination bribery and has been summoned by police roughly seven times. The episode underscores the regulatory pressure bearing down on a bitcoin and digital-asset venue that processed about $441 million in trading volume over the past day.

The scale of Japan’s retail adoption helps explain the urgency. The Financial Services Agency cited more than 14 million open crypto accounts nationwide, with people earning under 7 million yen — about $43,600 — a year accounting for roughly 70% of them. By classifying tokens as financial instruments, the bill paves the way for regulated crypto ETFs that supporters argue would give everyday investors a clearer, lower-friction route into the asset class. The move positions Japan among the more structured major markets for defi and centralized digital-asset products as global regulators race to formalize oversight.

Bithumb competes directly with Upbit, operated by rival Dunamu, for dominance of South Korea’s digital-asset market, and the corruption probe carries political dimensions: investigators allege Kim used his committee position to repeatedly target Dunamu during proceedings. The dual-track scrutiny — a criminal investigation alongside earlier compliance penalties — highlights how exchange oversight in Asia is tightening in parallel with Japan’s legislative overhaul. For traders, the combined developments signal that the region’s largest venues now operate under intensifying legal and regulatory exposure, a backdrop that often amplifies volatility across candlestick ranges during periods of thin liquidity.

Taken together, the week’s headlines trace a single arc: Asia’s regulators are moving decisively to formalize crypto oversight, whether through Japan’s investor-protection framework or South Korea’s corruption crackdown. COINOTAG’s aggregate market data frames the stakes — the Fear & Greed Index sits at 12, deep in extreme-fear territory, while Bitcoin dominance has climbed to 70.4% and total crypto market capitalization holds near $1.8 trillion. With Bitcoin trading around $63,000, capital is consolidating into the largest assets as smaller tokens bleed. Tighter Asian rules could ultimately deepen institutional participation, but in the near term they add another layer of uncertainty to an already defensive market.