[2022 National Audit] Lone Star, Short Selling, and Low-Income Finance Issues Highlighted in the Political Affairs Committee

Bithumb Lee Jung-hoon Absent, 'Companion Summons' Issued

[Image source=Yonhap News]

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] On the 6th, the National Assembly's Political Affairs Committee hearing covered issues such as Lone Star, financial services for ordinary citizens, the Terra-Luna incident, and the ban on short selling. The committee resolved to issue a summons for former Bithumb Korea Chairman Lee Jung-hoon, who did not appear as a witness.

The issue of the Lone Star incident was raised first by Hwang Un-ha, a member of the Democratic Party of Korea. Rep. Hwang pointed out, "According to the arbitration ruling, the arbitration panel judged that the sale of Korea Exchange Bank was a structure in which former Hana Financial Group Chairman Kim Seung-yu and former Financial Services Commission Chairman Kim Seok-dong colluded to unfairly reduce the sale price, and Lone Star claimed damages from the Korean government."

Lee Yong-woo, also from the Democratic Party, criticized the handling of the financial-industrial capital separation issue as unsatisfactory. He questioned, "When consulting with Kim & Chang, didn't their opinion letter at the time explain that it only applied to domestic industrial capital?" He added, "During the investor-state dispute with Lone Star, Kim & Chang represented Lone Star and argued that Lone Star was a 'non-financial major shareholder.' Through Kim & Chang, Lone Star's representative, the advice of Standing Committee member Kim was used as a basis for Lone Star."

Short selling also became a point of contention. Kang Min-kook of the People Power Party said, "Last month, the average daily short selling transaction amount in the KOSPI market increased by 40% compared to the previous month," and urged, "Short selling is currently causing enormous losses to individual investors. Even now, temporary measures to ban short selling should be implemented to protect individual investors and stabilize the stock market."

Yu Eui-dong, also from the People Power Party, mentioned that "since the enforcement of the Capital Markets Act until this year, 127 cases of illegal short selling have been detected, but the Financial Services Commission has not disclosed a single main culprit," noting that public trust in short selling is declining.

There were also continuous criticisms regarding insufficient measures for financial services for ordinary citizens. So Byung-chul of the Democratic Party said, "The financial policy characteristics of the Yoon Seok-yeol administration favor corporations and deregulation, but there are no measures for ordinary citizens amid high interest rates, high inflation, and high exchange rates," adding, "The livelihood measures announced after the appointment of the Financial Services Commission chairman have been heavily criticized as moral hazard, causing public anxiety."

Yoon Sang-hyun of the People Power Party emphasized the need for safety measures regarding the Terra-Luna incident, which heavily affected the 20s and 30s age group.

Rep. Yoon stated, "While investors bear responsibility for their investments, four parties need to share the damage: politicians who blindly supported stablecoins without understanding them, government agencies that failed to regulate the coin speculation market without safeguards, financial institutions that lent without assessing repayment ability, and exchanges focused solely on profit-making," and pointed out, "There are many indications that virtual currencies are involved in the increasing drug trade in Korea recently, so the problem is serious."

Meanwhile, the Political Affairs Committee summoned former Bithumb Korea Chairman Lee Jung-hoon, Dunamu CEO Lee Seok-woo, DSRV Labs CEO Kim Ji-yoon, former X-Tack CEO Park Jin-hong, and Chai Corporation General Manager Shin Hyun-sung as witnesses. However, former Chairman Lee Jung-hoon submitted a letter of absence for the hearing on the 30th of last month. Shin Hyun-sung also submitted a letter of absence to the National Assembly. Accordingly, the National Assembly tabled and resolved the issuance of a summons for former Chairman Lee Jung-hoon.

This content was produced with the assistance of AI translation services.