Former Upbit CEO Questioned in South Korean Lawmaker Nepotism Probe

VADODARA, February 4, 2026 — Seoul police questioned former Dunamu CEO Lee Sir-goo for approximately one hour as a witness in a nepotism investigation targeting independent lawmaker Kim Byung-kee. According to Newsis reporting, the Seoul Metropolitan Police Agency's Public Crime Investigation Division summoned the former head of South Korea's largest cryptocurrency exchange operator. This latest crypto news emerges as global market sentiment registers extreme fear with Bitcoin trading at $76,599, down 2.44% in 24 hours.

Investigation: Witness Questioning in Lawmaker Job Solicitation Case

Police investigators focused on allegations that lawmaker Kim Byung-kee solicited employment for his second son during a November 2024 dinner meeting. The gathering included the CEO of rival exchange Bithumb alongside other industry figures. Market structure suggests regulatory scrutiny intensifies during market downturns, creating additional pressure on exchange operations. The questioning occurred as part of standard witness procedures rather than indicating direct involvement by the former executive.

According to on-chain data, South Korean exchanges typically experience reduced trading volume during regulatory investigations. This pattern mirrors the 2021 correction when similar probes preceded market consolidation phases. The timing coincides with broader regulatory challenges facing South Korean crypto firms, including proposed stake limitations for exchange executives.

Market Context & Historical Precedent

Historically, South Korean regulatory actions have created temporary market dislocations followed by consolidation. Similar to the 2021 correction when multiple exchange investigations preceded a 40% market drawdown, current conditions show parallel characteristics. The ongoing debate over executive stake limits represents another regulatory front affecting market psychology.

In contrast to previous cycles, current market conditions combine regulatory pressure with macroeconomic headwinds. Underlying this trend, institutional adoption continues despite short-term volatility. Market analysts note that regulatory clarity typically follows investigation phases, potentially creating long-term stability. The current extreme fear sentiment at 14/100 on the Crypto Fear & Greed Index suggests oversold conditions may develop.

Technical Architecture & Price Action

Bitcoin's current price action shows consolidation around the $76,599 level with immediate resistance at $79,400. Market structure suggests a critical Fibonacci 0.618 retracement support at $74,200 from the 2025 rally high. This technical level represents a potential liquidity grab zone where market makers may accumulate positions. The 200-day moving average at $72,800 provides additional structural support.

Volume profile analysis indicates thinning liquidity above $80,000, creating a fair value gap between current prices and previous consolidation zones. Order block formation around $75,000-$77,000 suggests institutional accumulation may be occurring despite negative headlines. Relative Strength Index (RSI) readings at 32 indicate oversold conditions not seen since the September 2025 correction.

By The Numbers

Why It Matters

Regulatory investigations targeting exchange executives create uncertainty for institutional capital allocation. Market structure suggests such events typically precede consolidation phases rather than trend reversals. The recent ETF outflows of $269.9 million indicate institutional caution during regulatory developments. Consequently, retail traders often misinterpret regulatory scrutiny as fundamentally negative rather than part of market maturation.

South Korea represents approximately 8% of global cryptocurrency trading volume according to CoinMarketCap data. Regulatory actions in this jurisdiction therefore impact global liquidity conditions. Historical cycles show that regulatory clarity following investigations typically strengthens market structure over 12-18 month horizons. The current probe occurs alongside other market pressures including futures liquidations exceeding $577 million during the recent volatility spike.

Expert Commentary

"Regulatory investigations during market downturns create amplified psychological effects. Market participants should distinguish between procedural witness questioning and substantive allegations. Historical precedent suggests these events represent market maturation rather than existential threats to the asset class." - CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Market structure suggests two primary scenarios based on current technical levels and regulatory developments.

• Bullish Invalidation Level: $79,400 resistance must break with volume confirmation to signal trend reversal. This level represents the previous consolidation zone upper boundary.
• Bearish Invalidation Level: $74,200 Fibonacci support must hold to maintain current market structure. A break below this level could trigger further liquidation events.

The 12-month institutional outlook remains cautiously optimistic despite short-term regulatory headwinds. Regulatory clarity typically follows investigation phases, potentially creating stronger frameworks for institutional participation. Market analysts project that resolution of current probes could coincide with the next macroeconomic easing cycle, creating favorable conditions for renewed capital inflows.