Bithumb and Its Invisible Founder: The Rise and Fall of Korea's 'First' Amid Legal Entanglements and Restructuring Games

1. Overview: Bithumb and Two "Founder Lines"

Bithumb is one of the earliest cryptocurrency exchanges in South Korea, established in 2013 by BTC Korea.com Co. Ltd, launched under the name Xcoin in 2014, and renamed Bithumb in 2015, headquartered in Seoul, supporting only the Korean won (KRW) fiat market.

The formal "founder" is South Korean entrepreneur Dae-sik Kim, who founded it in 2014 and served as the first CEO until around 2017-2018; in South Korean media and regulatory discourse, Lee Jung-hoon is seen as the "actual owner" or "controlling person" of Bithumb through a complex equity structure.

In 2017, Bithumb captured over 70% of the domestic market share in South Korea, becoming one of the largest exchanges globally by trading volume, with a cumulative transaction amount exceeding $1 trillion and over 8 million registered users by 2019; however, due to the rise of Upbit, hacking incidents, and regulatory and governance controversies, its market share fell to less than 10% by 2023, yet it remains the second-largest CEX in South Korea.

The two figures have roughly divided roles: Dae-sik Kim represents the "early product and operational founder from 2014-2017"; Lee Jung-hoon represents the "invisible controller who took over through capital and governance after 2016 and became embroiled in the BXA token case." Understanding the rise and fall of Bithumb requires viewing these two individuals and their asset networks together.

2. Dae-sik Kim: Family Background and Early Information

Public English/Korean materials provide very little information about Dae-sik Kim's family, confirming only that he is South Korean and has been an entrepreneur in Seoul for a long time; specific birth year, birthplace, parents' occupations, and family class are not disclosed in mainstream media or company materials, falling under "limited public information."

From his career trajectory, he was already the CEO of several tech companies (such as GEO.M) in the late 2000s, indicating that he had considerable business experience and capital accumulation before entering the crypto industry, resembling a typical "tech + business local serial entrepreneur" rather than a one-time windfall crypto player.

His early experiences likely coincide with the South Korean internet entrepreneurship wave, the rise of mobile internet, and the growth of online gaming and virtual goods trading, an environment conducive to his keen capture of the "virtual asset exchange" business model, but details are not systematically elaborated in English public reports, still falling under "limited public information."

3. Dae-sik Kim: Education and Career Starting Point

Regarding his higher education background (which university he attended, what major, whether he completed a degree), there are no reliable records in public English materials, most summarizing him with labels like "South Korean entrepreneur" and "serial entrepreneur"; this part falls under "limited public information / unable to confirm at this time."

The earliest known career point is from 2008-2012 when he served as CEO of GEO.M, focusing on IT/software consulting, indicating that he had several years of experience in the tech and internet services industry before founding Bithumb, accumulating team, client, and product experience.

In 2013, he participated in founding BTC Korea.com Co. Ltd, preparing for the digital asset exchange to launch Xcoin/Bithumb the following year; this company became the early parent of subsequent entities like Bithumb Korea.

These experiences shaped his "engineering + operations" perspective: he was very familiar with trading systems, settlement processes, and local payment interfaces, enabling him to quickly launch usable matching and settlement products in the early stages when South Korean regulation was not yet established, which was one of the key backgrounds for Bithumb's rapid capture of the domestic market from 2014-2016.

4. Dae-sik Kim: Founding Bithumb and Early Golden Period

In January 2014, the BTC Korea.com team officially launched the Xcoin exchange in Seoul, with Dae-sik Kim serving as founder and CEO; in 2015, it was renamed Bithumb and continued to iterate on functions and currencies.

Bithumb initially focused on the "KRW single fiat market + multi-currency spot trading," not attempting a multi-fiat structure like USD or JPY, greatly simplifying fiat settlement and regulatory interfaces, while gaining strong stickiness among retail investors in South Korea.

In 2016, it launched a mobile trading app (Android and iOS) and opened REST API access for high-frequency users and quantitative teams, providing a smoother matching experience, which was an important product move that amplified its advantages during the 2017 bubble phase and formed a "liquidity flywheel."

In 2017, Bithumb entered its so-called "golden era":

Daily trading volume once reached about 1 trillion KRW (approximately $770 million), becoming one of the largest Bitcoin exchanges globally;

The domestic market share in South Korea exceeded 70%, overwhelming competitors like Coinone, Korbit, and Gopax at the time;

By collaborating with New World Duty Free, convenience store CU, GS25, etc., it launched Bithumb Cash and offline barcode payments, bringing the concept of crypto payments to ordinary consumers.

During this period, Dae-sik Kim's role leaned more towards "frontline CEO + product operations head":

Responsible for overall business direction, currency listing strategies, and negotiations with local banks (like NH Bank);

Promoting mobile experience, marketing activities, and offline payment expansion;

Personally representing the company externally, shaping Bithumb's image as "the gateway to digital assets in South Korea."

However, this rapid expansion also sowed hidden dangers: server pressure, insufficient internal security engineering, and a conservative fee and cost structure (0.25% standard fee rate, complex fee discount coupon system) laid the groundwork for subsequent user loss and security incidents.

5. Dae-sik Kim: Path and Controversies After Leaving Bithumb

From the second half of 2017, alongside the 2017 hacking incident, government tax investigations, and market fluctuations, Dae-sik Kim gradually faded from daily operations; multiple English materials indicate that he left the CEO position around 2018 and joined Bezant Foundation and Jehmi as Chief Cryptocurrency Officer, focusing on payment protocols and entertainment content payment.

Bezant aimed to create payment protocols and tokens for digital entertainment and e-commerce, targeting to raise $40 million, with Dae-sik Kim responsible for business, product, and partnership expansion, transferring his trading and asset experience accumulated at Bithumb to the payment field.

In March 2025, South Korean prosecutors launched a new investigation against Dae-sik Kim, accusing him of misusing about 30 billion KRW (approximately $2 million) of company funds for personal apartment rental deposits while serving as a director/advisor at Bithumb, triggering controversies over integrity and corporate governance; prosecutors raided Bithumb's office and investigated related financial records.

Bithumb acknowledged some facts in interviews with media like the Chosun Ilbo, stating that Dae-sik Kim borrowed from other institutions and had repaid all apartment-related expenses after the financial regulatory agency began investigating; the company stated it would cooperate with the investigation, emphasizing that operations were managed by a "professional management team."

This incident had two layers of impact on his image:

In the eyes of regulators and the public, it strengthened the impression that "the early management had governance and fund usage irregularities";

Within the industry, he is more viewed as "an old-generation entrepreneur who has left the front line and occasionally plays a role in company structure and project advisory," rather than the current strategic leader of Bithumb.

6. Lee Jung-hoon: From Game Account Trading to "Invisible Boss"

South Korean media and research reports generally regard Lee Jung-hoon as the actual controller of Bithumb: he was the former chairman of the board of Bithumb Holdings and Bithumb Korea, and is the most influential figure behind the complex shareholding structure.

Before entering the crypto industry, he founded South Korea's largest game virtual goods C2C platform "Itemmania" (아이템매니아) and renamed the company to IMI (Internet Mania Interactive), serving as the representative director (CEO) for a long time, transforming IMI into a leading platform with over 8 million members and a market share exceeding 50% in the Korean game item trading sector.

Officially and in multiple reports, it is mentioned that he decided to create a safer intermediary platform in 2002 after being scammed in P2P trading within games, contrasting sharply with the later Bithumb and BXA controversy: early on, he was an entrepreneur aiming to "reduce scams for players," but later was accused by prosecutors of being a fraud designer; although he was ultimately acquitted, his reputation was significantly damaged.

A Korean report also mentioned that Itemmania, under IMI, later introduced external capital and continuously extended its trading logic to digital assets (including game assets and crypto assets); some English reports mentioned that he sold Itemmania to Goldman Sachs, but details of the transaction are scarce in public channels, falling under "limited public information / inconsistent statements."

Regarding his birth date, family background, and academic experience, public English materials are also very limited, and it can only be inferred from his long entrepreneurial record that he was likely born in the 1970s, but this is speculative and cannot be confirmed, thus categorized as "limited public information / unable to confirm."

7. Lee Jung-hoon: Capital Structure and Connections After Taking Over Bithumb

Research reports like Tiger Research indicate that after Bithumb gained early advantages from 2014-2016, "the joining of IMI founder Lee Jung-hoon" was a significant factor in promoting system upgrades, team expansion, and enhancing risk control: many technical and operational backbones from IMI entered Bithumb, systematically transforming the platform's technical architecture.

The South Korean Fair Trade Commission recognized Bithumb as a "large enterprise group" in 2023-2024 and officially listed Lee Jung-hoon as Bithumb's "actual controller," indicating that he controls Bithumb Holdings through DAA, which holds about 73.56% of Bithumb Korea; combined with shares held by management and friendly shareholders, his total control is about 65.8%.

This means that even though the "founder" of Bithumb in the public eye is Dae-sik Kim, the real power and voice in the IPO planning lies with Lee Jung-hoon, who comes from the virtual goods background, which is why he is the one being held accountable or negotiating in most legal disputes and acquisition talks.

He has long-standing cooperative relationships with current and former Bithumb executives: for example, current CEO Lee Jae-won is described by South Korean media as "having worked with Lee Jung-hoon at IMI/Itemmania since 2007 and later brought into Bithumb as a confidant," joining Bithumb in 2017 as a senior advisor for management and overseas business, and becoming CEO in 2022.

In terms of capital relations, from 2018-2020, there were multiple reports of Nexon’s parent company NXC/NXMH intending to acquire a majority stake in Bithumb, and there were also reports of FTX attempting to acquire Bithumb, but these transactions ultimately did not materialize; the complex shareholding and Lee Jung-hoon's litigation status are considered major reasons for the failure of these transactions.

8. BXA Token Case: Lee Jung-hoon's "$100 Million Fraud Case"

In 2018, BK Group chairman Kim Byung-gun led negotiations with Bithumb Holdings to acquire about 50% of Bithumb for a total price of about $400 million through the Singapore Blockchain Exchange Alliance (BXA).

Lee Jung-hoon was accused of:

Requesting Kim Byung-gun to prepay $100 million as a "contract fee" and promising that Bithumb would list the BXA token, with the proceeds from selling the BXA token on the platform used to pay the remaining acquisition price;

After raising about 1.12 billion KRW (approximately $100 million) with Kim and other investors, the BXA token ultimately did not list on Bithumb, resulting in significant losses for investors;

Prosecutors claimed he had no intention of actually listing the token from the beginning but used the "listing promise" to raise funds, suspected of violating the fraud provisions of the Specific Economic Crimes Aggravated Punishment Act.

In July 2021, the Seoul District Prosecutor's Office formally indicted Lee Jung-hoon, seeking an 8-year prison sentence, estimating the fraud amount to be between about 110 billion KRW (approximately $85 million) and 129.8 billion KRW, with "inconsistent statements"; dozens of BXA token investors also filed civil lawsuits against him and Kim Byung-gun.

In January 2023, the Seoul Central District Court acquitted him in the first instance, finding that the evidence submitted by the prosecution was insufficient to prove he "guaranteed the listing" in the contract, and the credibility of Kim Byung-gun's statement about "being guaranteed listing" was questionable; the court determined that the asymmetry of information and insufficient disclosure were more suitable for civil liability rather than constituting criminal fraud.

The prosecution appealed, but in 2024-2025, the High Court and the Supreme Court of Korea successively upheld the not guilty verdict, with the Supreme Court clearly stating: the contract was reviewed by both parties' lawyers, and there were no explicit terms guaranteeing the listing; the asymmetry of information and insufficient disclosure could constitute civil compensation liability but were insufficient to establish criminal fraud.

Even though he was acquitted on the criminal level, this case still had profound impacts on him and Bithumb:

In the public opinion arena, he transformed from "a successful game e-commerce founder" to the central figure "suspected of air coins and token pre-sales," with Bithumb being long embroiled in the BXA dispute;

Regulatory authorities imposed stricter requirements on Bithumb's governance, listing processes, and information disclosure, affecting its subsequent business development and licensing speed;

Some potential acquirers and IPO investment banks held a more cautious attitude towards its governance risks, weakening Bithumb's imagination in the capital market.

9. Bithumb: Key Timeline and Evolution of the Platform

2013-2015:

2013: BTC Korea.com Co. Ltd established, preparing for the exchange.

January 2014: Xcoin launched in Seoul, with Dae-sik Kim as CEO;

2015: Brand renamed Bithumb, starting to be viewed by South Korean mainstream media as "the domestic Bitcoin trading hub."

2016-2017: Golden Era and Early Security Issues:

2016: Launched Android/iOS mobile app, further expanding retail user base;

June 2017, employee personal computers were hacked, leading to data leaks of over 30,000 users, with some accounts being hacked; South Korean courts later ruled that Bithumb was "partially responsible" in a user lawsuit, but the overall ruling tended to recognize that it was not a traditional financial institution;

By the end of 2017, Bithumb's daily trading volume reached 1 trillion KRW, with domestic market share exceeding 70%, ranking among the top exchanges globally.

2018-2019: Large-scale Hacking Attacks and Regulatory Pressure:

June 2018: Bithumb reported about $31 million worth of crypto assets stolen, subsequently suspending deposits and withdrawals;

March 2019: Another theft incident occurred from its own hot wallet, losing about 4.02 million EOS (approximately $13 million) and $6.2 million worth of XRP, with Bithumb claiming it was mainly company funds;

2019: South Korean tax authorities issued a tax bill of about $70 million to Bithumb, imposing a 22% withholding tax on profits from foreign client transactions, referred to in the industry as a "tax bomb";

In 2019, it was officially disclosed that Bithumb's cumulative transaction amount exceeded $1 trillion, with over 8 million registered users, still a leading platform domestically.

2019-2021: IPO Attempts and BXA Turmoil:

In 2019, BTHMB (Bithumb Holdings) signed a reverse merger intention with U.S. listed company Blockchain Industries, hoping to land on the U.S. stock market through the formation of the "Blockchain Exchange Alliance (BXA)," but the transaction was ultimately shelved;

From 2020 onwards, there were multiple reports of Nexon’s parent company NXC/NXMH planning to acquire a 65% stake in Bithumb for about $460 million, but it did not materialize;

In September 2020, Seoul police raided Bithumb's office twice, investigating fraud related to the BXA token; Lee Jung-hoon became a key investigation target;

In January 2021, Lee Jung-hoon was formally indicted due to the BXA case.

2020-2023: Service Interruption Compensation, Governance Turmoil, and "Zero Fee" Strategy:

During the pandemic in 2020, Bithumb closed its offline customer service center, transitioning to full online support;

In January 2023, the South Korean Supreme Court ruled that Bithumb was liable for compensation for a service interruption incident in 2017 caused by a surge in order volume, requiring it to pay about $202,400 to 132 investors, on the grounds that "technical faults are the responsibility of the service operator";

At the same time, South Korean tax and prosecution authorities continued to investigate Bithumb's tax and executive embezzlement issues, with multiple directors and major shareholders accused of embezzlement and stock price manipulation, including the siblings known as "the actual controllers of Bithumb";

Faced with Upbit capturing the market with low rates, Bithumb launched a "zero fee for spot + partial derivatives" strategy in 2022, temporarily boosting market share, but it later fell back. Tiger Research pointed out that its market share has long hovered around 10%.

2023-2026: Preparing for IPO and Continued Governance Restructuring:

After Lee Jung-hoon was acquitted in the first and second trials and by the Supreme Court, South Korean media widely expect Bithumb to accelerate its IPO process, targeting to land on the domestic capital market around 2025;

By 2026, Bithumb remains the second-largest exchange in South Korea, second only to Upbit, with daily trading volumes fluctuating between $200 million and $400 million (depending on market conditions), supporting over 170 crypto assets, with its market positioning shifting from "absolute leader" to "high-risk, high-controversy but indispensable old second place."

10. Bithumb's Business Model and Product Structure

Basic Model:

Primarily centralized spot trading, with all currencies quoted only against KRW; users must complete real-name verification and bind a "real-name account" with a partner bank (long-term NH Bank) to deposit and withdraw;

Offers some wealth management/interest-bearing deposits, lending, leverage, and trading bot tools, but derivatives and leverage are relatively conservative compared to international peers, with core revenue still coming from spot matching fees and fiat deposit/withdrawal-related income.

Fee Rate and Price Strategy Evolution:

From 2017-2018, the standard trading fee was around 0.25%, which could be reduced to 0.04% by purchasing "fee discount coupons," but users needed to judge and purchase the appropriate tier themselves, making the experience relatively complex;

After Upbit captured the market with a unified low fee of 0.05%, this "high standard price + coupon discount" model was seen as unfriendly, prompting a large number of high-frequency users to migrate to Upbit;

To compete for market share, Bithumb announced a zero-fee policy for spot trading in 2022, temporarily boosting trading volume and market share, but long-term profitability and sustainability remain questioned by research institutions.

Payment and Expansion Business:

Initially combined crypto assets with offline payments through products like Bithumb Cash, supporting purchases of gift cards and barcode payments in scenarios like New World Duty Free, CU, GS25, attempting to position itself as "crypto payment infrastructure";

It also planned to deploy self-service payment terminals Touch B, aiming to embed crypto payments into unmanned retail and offline consumption, but this line cooled significantly after regulatory tightening.

Institutional Products:

In 2019, it established Ortus OTC business in Hong Kong to provide large-scale off-exchange matching, custody, and U.S. bank account transfer services for institutional clients, strengthening the brand of "compliant large transactions";

As domestic AML and VASP regulations tightened in South Korea, this type of cross-border OTC business faced increasing compliance and banking pressure, with limited incremental space.

11. Security Incidents, Regulation, and Legal Risks

Technical and Security Incidents:

In 2017, employee computers were hacked, leading to data leaks of over 30,000 users, with some accounts hacked;

In 2018, about $31 million was stolen, and in 2019, 4.02 million EOS + $6.2 million worth of XRP were stolen, indicating serious flaws in its cold/hot wallet management and internal permission control for a long time; multiple security incidents compounded, severely damaging its brand and user trust as "the first in Korea," providing a window for competitors like Upbit and Korbit.

Tax and Regulation:

In 2019, the "tax bomb": the South Korean National Tax Service imposed about 80.3 billion KRW withholding tax (approximately $70 million) on Bithumb for foreign client transaction profits, theoretically possible to recover from clients but practically almost impossible to execute;

In 2023, the Supreme Court ruled that Bithumb was liable for compensation for a service interruption in 2017, reinforcing the judicial attitude that "technical faults are the responsibility of the operator";

From 2023-2025, tax and prosecution authorities raided its office multiple times, investigating price manipulation, embezzlement, and the use of apartment rental funds, indicating ongoing skepticism from regulators towards its governance structure.

Corporate Governance and Major Shareholder Cases:

In addition to Lee Jung-hoon being accused of fraud in the BXA case and ultimately acquitted, another "actual controller" related to Bithumb, a certain sibling, was arrested and prosecuted for allegedly manipulating the stock price of a related listed company through convertible bonds and embezzling company funds, with the amount involved said to be "potentially hundreds of billions of KRW";

At the end of 2022, one of Bithumb's largest shareholders, a certain CEO, was investigated for embezzlement and stock price manipulation, and subsequently "fell to his death," further deepening external concerns about its internal governance and power struggles.

Court's Fluctuating Position on Bithumb:

In data breach-related cases, courts have denied part of its regulatory obligations as a financial institution, citing that "crypto assets are primarily used for speculation and do not constitute electronic payment means";

However, in service interruption compensation cases, they have clearly recognized its responsibility for system stability, requiring it to compensate users for losses, reflecting a tightening trend in the South Korean legal system regarding the classification of crypto platforms.

12. Current Management, IPO, and Real Impact

Management Evolution:

After Dae-sik Kim stepped down from the CEO position around 2018, he was succeeded by several professional managers;

Around 2020, many English materials listed Heo Back Young as CEO, who joined Bithumb in 2017 responsible for compliance and became CEO in 2020;

However, media reports in South Korea in 2026 indicate that the current CEO is Lee Jae-won, who joined Bithumb in 2017 as a senior advisor for management and overseas business, became CEO in 2022, and was re-elected for a second term in 2024; reports also emphasize his long-standing relationship with Lee Jung-hoon since 2007 at IMI.

Different literature has discrepancies in the timing and "inconsistent statements" regarding the "current CEO," but it can be confirmed that since Dae-sik Kim's departure, the company has shifted to a governance model of "professional managers + controlling person behind the scenes."

IPO and Strategic Direction:

After the final acquittal in the BXA case, the market widely expects Bithumb to accelerate its IPO process, targeting to land on the South Korean capital market around 2025; South Korean media reports that it has contacted multiple brokerages (such as Samsung Securities) to assess valuation and listing paths;

To enhance valuation and the probability of regulatory approval, Bithumb is promoting transparency in corporate governance, cleaning up subsidiaries (Bithumb Live, Bithumb Systems, Bithumb Meta, etc., are being liquidated or closed), and focusing business on core trading and custody.

Market Position and Real Impact:

Although Upbit has taken absolute dominance, Bithumb still accounts for about 10% of the domestic trading volume in South Korea, remaining the second-largest exchange after Upbit, with daily trading volumes fluctuating between billions to tens of billions of dollars (depending on market conditions);

For South Korean retail investors and some institutions, Bithumb remains an important source of liquidity, especially in specific altcoins and KRW trading pairs;

In the global CEX ecosystem, it is no longer the most dazzling player, but due to its security incidents, governance controversies, and legal cases, it has become an important case in regulatory research and compliance discussions.

13. Comprehensive Positioning of the Two Core Figures

Dae-sik Kim:

His contribution lies in "establishing the KRW-crypto trading infrastructure in South Korea without precedent" and pushing Bithumb to the forefront of global trading volume from 2014-2017;

His shortcomings include leaving many flaws in security, governance, and fee design, leading to the platform's rapid decline amid hacking, tax investigations, and fierce competition;

His involvement in Bezant and payment protocols after leaving indicates his self-positioning as a "product and payment system entrepreneur," but recent investigations into the use of apartment funds have extended the impression of his "weak governance risk" to new projects.

Lee Jung-hoon:

He integrated his experience in virtual goods C2C (Itemmania/IMI) and understanding of trading matching and virtual asset governance into Bithumb, strengthening its system construction and team organization, and was one of the behind-the-scenes drivers for Bithumb's peak in 2016-2017;

At the same time, he controls Bithumb through a complex equity structure and was accused in the BXA case of pre-selling unlisted tokens and collecting large "contract fees"; although ultimately acquitted criminally, he left a deep negative imprint in social and industry opinion;

In the 2020s South Korean crypto history, he is both a "business genius from game virtual goods to crypto exchanges" and a "representative figure on the edge of governance controversies and legal issues," this dual image somewhat defines the temperament of Bithumb: highly innovative and expansive, yet constantly testing the edges of security, compliance, and governance.