A Family Connection That Raised Red Flags
South Korean politics is once again grappling with questions of integrity after Kim Byung-kee, a senior Democratic Party floor leader, found himself at the center of a conflict-of-interest controversy. The issue? While Kim was publicly grilling Upbit—the country’s largest cryptocurrency exchange—his son had quietly landed an internship at Upbit’s main competitor, Bithumb.
Former staffers say the timeline tells a troubling story. Last November, Kim met privately with Bithumb executives. Shortly after, an internship posting appeared that seemed tailored to his son’s background in U.S. mathematics programs. By January, the son was working at Bithumb. Then in February, Kim took to the National Assembly floor to hammer Upbit over its market dominance, its connection to the Terra-Luna disaster, and thousands of customer data breaches. Bithumb never came up in his questioning.
Kim has defended himself, saying his concerns were purely about policy, not personal gain. Bithumb insists its hiring process was transparent and open to all applicants. But the appearance of a lawmaker directing aides to “go after Dunamu”—Upbit’s parent company—while his family benefits from the rival exchange has left many Koreans skeptical. It’s the kind of situation that makes people wonder whether the booming crypto industry can ever be regulated fairly when political ties run this deep.
Upbit’s Grip on the Market Sparks Regulatory Alarm
The scandal comes at a sensitive moment for South Korea’s crypto sector. New figures from the Financial Supervisory Service show Upbit processed roughly 72 percent of all domestic crypto trades in the first half of 2025—that’s about 833 trillion won, or 642 billion U.S. dollars. Bithumb captured 26 percent, leaving all other licensed platforms fighting over scraps.
Regulators are starting to worry that Upbit has become too big to fail, especially with parent company Dunamu pursuing a merger with internet giant Naver. Officials are now considering banking-style rules: forcing exchanges to compensate users after hacks, requiring immediate public disclosure of security incidents, and mandating larger capital reserves. Exchanges could also face fines for service outages—a real concern after Upbit froze withdrawals during unannounced wallet maintenance last quarter, leaving millions of users locked out for hours.
Some argue these reforms are long overdue and that Kim’s February grilling of Upbit shows exactly why lawmakers need to challenge dominant players. But now that his family ties to Bithumb have surfaced, what looked like tough oversight starts to look a lot more like self-interested mudslinging.
Why This Matters Beyond One Politician’s Scandal
South Korean retail investors haven’t forgotten the Terra-Luna collapse of 2022, which wiped out billions and set off an international manhunt for founder Do Kwon. Since then, voters have been demanding tougher protections, and both major parties promised action ahead of next spring’s legislative elections. Kim’s situation plays right into opposition talking points about insiders gaming the system while ordinary investors are left exposed.
If prosecutors decide to investigate, it could actually speed up passage of the pending Digital Asset User Protection Act, which would force crypto exchanges to follow the same fiduciary standards as banks. Globally, a Korean crackdown would fit into a broader pattern—following the EU’s MiCA framework and U.S. efforts to require exchange registration—as governments everywhere try to bring crypto under traditional financial rules.
Whatever happens to Kim personally, this episode captures a challenge facing regulators around the world: how do you encourage innovation in a new industry while making sure the people writing the rules—and their families—stay as transparent as the blockchain technology they’re supposed to be overseeing?
