S. Korea Raids Upbit, Bithumb CEXs And Messaging App Over Lawmaker's Crypto Scandal

A controversy involving a South Korean opposition lawmaker's cryptocurrency holdings has led to his resignation from his political party and eventual raids of the country's major centralized crypto exchanges Upbit and Bithumb, as well as the messaging app Kakao.

Lawmaker Kim Nam-kuk announced his resignation from the Minjoo party, or the main opposition Democratic Party of Korea, one of the major political parties in the country, over the weekend after it was publicized that he owned around $4.5 million worth of WEMIX coins, the native utility token of the Wemix ecosystem, in 2021, CoinDesk reported.

The opposition lawmaker made headlines last week as he became the center of conflict of interest accusations over crypto withdrawals he made last year.

While multiple news outlets in the country had already reported about Kim's crypto holdings a couple of years back, the question now lies on whether the lawmaker had insider information that helped boost his investments or if he had received crypto assets because of his political position.

He was also accused of trading coins during National Assembly judiciary committee meetings in May and November 2022.

Kim marketed himself as a frugal politician while he held 800,000 WEMIX coins between last January and February, which is approximately worth $4.5 million.

In connection with the ongoing investigation, South Korean prosecutors reportedly raided the offices of the two major centralized cryptocurrency exchanges in the country – Upbit and Bithumb.

These exchanges were supposedly used by Kim to open digital wallets, and the raids earlier this week led to the confiscation of the CEXs' transaction records, a local media reported.

Aside from the exchanges, the raid also included the seizure of records of the messaging app Kakao, which was allegedly used by the opposition lawmaker through its Klip cryptocurrency wallet.

While Kim already resigned from his political party, the ruling People Power Party in South Korea said earlier this week that it would launch an internal task force to dig deeper into the lawmaker's alleged crypto transfers, according to Rep. Yun Chang-hyeon.

Wemix, the crypto business behind the controversial crypto asset of the same name, already released a statement, clearing its name over illegal support allegations.

"We apologize for causing concern to the shareholders who support our WeMade and WeMix projects, the WeMix community and investors, and the many people who supported our WeMade's blockchain business," the company said in a blog post roughly translated by Google Translate and published a few hours ago.

"Reports to the effect that WeMade illegally supported Wemix or provided internal information related to investment to members of the National Assembly are completely untrue," WeMade CEO Jang Hyeon-guk said, adding that "Wemade plans to strictly deal with the production and distribution of fake news and take all civil and criminal measures."