Political Influence in Crypto Exchange Competition
South Korean authorities are looking into allegations that a senior lawmaker used his position to target cryptocurrency exchange Upbit. The investigation centers on Kim Byung-kee, a member of the ruling Democratic Party of Korea, who allegedly began attacking Upbit after his son secured employment at rival platform Bithumb.
Kim, who previously served as personnel director at the National Intelligence Service before entering politics, now faces multiple corruption allegations. Several of these involve claims that he used government connections to benefit his family members.
Timeline of Events
According to reports, Kim showed sudden interest in both Dunamu (Upbit’s operator) and Bithumb after being transferred to the National Assembly’s Political Affairs Committee following the April 2024 general election. An aide told investigators that Kim met with Dunamu’s CEO multiple times between September and November 2024, bringing his younger son to dinner meetings.
“He carried his son’s resume around and handed it over,” the aide said. Kim also met with Bithumb’s leadership in November 2024. His son ultimately joined Bithumb—not Dunamu—in January 2025.
What followed was a noticeable shift. The aide stated that Kim instructed staff to prepare questions attacking Dunamu’s market dominance, repeatedly saying the company “needs to be taught a lesson” and should be “shut down.”
In February 2025, Kim formally questioned the Financial Services Commission chairman about Dunamu’s monopolistic practices. The FSC chief responded that he would consult with the Fair Trade Commission on regulatory measures. The former aide told police, “I believe he made negative inquiries against a competitor because his son joined Bithumb.”
Broader Pattern of Allegations
The Bithumb allegations fit into a larger pattern of alleged nepotism. Kim is accused of intervening to secure his elder son’s employment at the NIS in 2016—the same agency where Kim built his career. A leaked recording reportedly shows Kim’s wife pressuring an NIS official, saying she needed “confirmation” her son would be hired. The official allegedly promised to create a special recruitment process around the son. Four months later, the son was hired through precisely such a process.
Other allegations include Kim personally visiting a university president to secure his younger son’s admission, receiving hotel vouchers worth 1.6 million won from Korean Air while overseeing its merger review, and his wife allegedly misusing a district council official’s expense card.
Market Context
This scandal unfolds during intense competition in Korea’s crypto market. According to CoinGecko, Upbit leads South Korea’s trading volume with 63%, followed by Bithumb at 30%. Upbit’s dominance has been slipping recently—its market share fell below 70% for the first time since 2020, while Bithumb dramatically increased marketing spending from 16.1 billion won in 2023 to 192.2 billion won in 2024.
The landscape faces further potential changes as Binance prepares to complete its Gopax acquisition. For an industry where regulatory standing often determines survival, this scandal raises questions about political influence over competitive dynamics.
Kim has denied any wrongdoing, and the investigation continues. The situation highlights the complex intersection of politics, regulation, and business in South Korea’s rapidly evolving cryptocurrency sector. It’s one of those cases where the timing looks suspicious, but we’ll need to wait for the investigation to conclude before drawing firm conclusions.
I think what’s interesting here is how personal connections might influence regulatory discussions. The crypto exchange market in South Korea is quite concentrated, so any regulatory pressure on one major player could significantly benefit competitors. Whether these allegations prove true or not, they certainly create an uncomfortable atmosphere for the industry.
Market participants are probably watching this closely. Regulatory uncertainty can be challenging for businesses, and when politics enters the picture, it adds another layer of complexity. The relationship between exchanges and regulators is already delicate in many jurisdictions, and this situation doesn’t make things any simpler.
We’ll have to see how this develops. Investigations like these can take time, and the truth might be more complicated than initial reports suggest. For now, it’s a story about potential conflicts of interest in a high-stakes industry.
