Bithumb, alongside fellow exchange UPbit, was targeted by a number of South Korean government agencies, including the National Tax Service (NTS), the Financial Services Commission (FSC), and the Korea Financial Intelligence Unit (KFIU), after investors raised concerns.
The NTS's investigation launched in January 2018, and included a full audit of Bithumb's cryptocurrency holdings and activities, along with the seizure of computerized files and devices. The investigation focused on the exchange's transaction histories, primarily to evaluate tax compliance.
Bithumb, like many exchanges during 2017, had benefitted from the surge in demand for purchasing and trading cryptocurrencies. Its profits had reportedly increased 171-fold over the 12 months leading to the NTS investigation, though it's probable that much of that was garnered simply by the appreciation of many cryptocurrencies over the year.
"NTS initiated several investigations into Bithumb between 2014 and 2017, and over the past four years, Bithumb has continuously paid all of the taxes imposed to the company without any conflict with the NTS," said an NTS representative. "While a $28 million tax was imposed onto Bithumb, no evidence [of] tax evasion and illicit activities was shown and the NTS closed the investigation into Bithumb officially, clearing the company."
Announced in May, Bithumb, in cooperation with South Korean financial authorities as part of its anti-money laundering efforts, ceased services to residents of 11 countries that were identified by the Financial Action Task Force as having failed to comply with AML standards.
South Korean regulators have been active in the country's thriving cryptocurrency markets. Yesterday, local media reported that police are recommending charges to be brought against the Coinone exchange for running an illegal gambling operation, specifically due to its margin trading services. It is expected that three leading Coinone executives, including CEO Chae Myung-hoon, will be prosecuted.
So far, there has been no additional information as to the investigation into UPbit.
Translations by CCN.