South Korean police have summoned senior figures from the country’s biggest crypto exchanges as part of an investigation into allegations that an independent lawmaker sought favors to benefit his son’s crypto-sector employment. What happened - The Seoul Metropolitan Police Agency’s Public Crimes Investigation Unit called former Dunamu CEO Lee Seok-woo and several Bithumb executives as witnesses on Wednesday in connection with allegations against lawmaker Kim Byung-kee. - Police also summoned a Bithumb executive on Tuesday and another official on Wednesday for questioning related to the same probe. Allegations and timeline - According to local reports, investigators questioned Lee about a November 2024 dinner meeting where Kim is alleged to have requested a job for his second son at Dunamu, operator of Upbit — South Korea’s largest crypto exchange. - When that placement reportedly fell through, Kim allegedly secured a position for his son at rival exchange Bithumb. The son worked there for about six months beginning in January 2025. - Former aides have told reporters that Kim, a former Democratic Party floor leader now sitting as an independent, had taken an active interest in hiring his son at crypto firms including Dunamu and Bithumb. Claims of political interference - The reports contend that after the November meeting, Kim instructed aides to target Dunamu’s competitors and publicly criticized Dunamu’s market position, calling a monopoly “a complete problem.” - Prosecutors say Kim repeatedly questioned Dunamu during Political Affairs Committee sessions in a manner that could be seen as intended to damage the company and advantage Bithumb, where his son had been employed. - Kim reportedly cited a Financial Intelligence Unit (FIU) review that flagged nearly 700,000 instances in which Upbit did not follow proper Know-Your-Client (KYC) procedures as part of his criticism. Regulatory backdrop: ownership cap debate - The police probe unfolds as the Financial Services Commission (FSC) considers a separate proposal to cap major shareholders’ stakes in crypto exchanges at roughly 15%–20%. - FSC Chairman Lee Eog-weon has argued limiting controlling shareholders’ ownership is needed because current rules focus on anti-money laundering and investor protection but do not address concentrated ownership risks. - The proposal has drawn strong pushback from exchanges and some lawmakers. A joint council representing Upbit, Bithumb and Coinone has opposed the cap, warning it could stifle the domestic crypto industry. - Critics note that if enacted, the cap would force prominent industry figures — including Dunamu Chairman Song Chi-hyung and Coinone founder Cha Myung-hoo — to divest substantial holdings to comply. - The ownership limit is expected to be proposed as part of the Digital Asset Basic Act (the second phase of the Virtual Asset User Protection Act), which aims to establish a broader regulatory framework for the sector. Why it matters - The investigation brings together political influence, alleged preferential hiring and competition between top exchanges at a time when regulators are reconsidering how to structure and police crypto markets in South Korea. - Outcomes from the inquiry and the parallel policy debate over ownership caps could influence governance, market structure and investor confidence across the country’s crypto industry. Police and the involved parties have not publicly disclosed detailed findings; the probe is ongoing. Read more AI-generated news on: undefined/news

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