DP's Kim Nam-kuk leaves party over cryptocurrency investment

Democratic Party (DP) lawmaker Kim Nam-kuk, who has been at the center of controversy over his cryptocurrency investments, has announced that he will leave the party.

Democratic Party Kim Nam-kuk walks into his office at the National Assembly on Sunday. [YONHAP]

Democratic Party (DP) lawmaker Kim Nam-kuk, who has been at the center of controversy over his cryptocurrency investments, announced that he will leave the party.

Kim said he will continue to fight for his innocence as an independent lawmaker.

"I am very apologetic to my fellow party members, whom I respect," Kim said in a Facebook post on Sunday.

"Today, I will temporarily leave the Democratic Party that I love as I came to the conclusion that it is not right to pass the burden on to the party and its members."

Kim blamed the media for false articles about him and said that he will take legal action.

Noting the importance of next year's general election, Kim said he believes that the controversial issues surrounding him should no longer affect the party's approval rating.

"I will unveil the truth while fighting against unfair political attacks as an independent legislator," Kim said.

Kim repeatedly tried to clarify the situation since the issue broke a week ago.

However, his explanations were found to be contradictory, and questions were also raised about his ethics when it came to light that he was trading cryptocurrencies during National Assembly committee sessions.

The controversy surrounding Kim's cryptocurrency investments first surfaced last week when the media reported that he owned 6 billion won ($4.4 million) worth of Wemix tokens that were issued by the game publisher Wemade.

It was reported that Kim offloaded all of his investment just before the "travel rule" took effect in March last year.

The rule requires the disclosure of the identity of a buyer and seller when a cryptocurrency exchange exceeds 1 million won.

Wemix is a controversial cryptocurrency that was delisted from all four cryptocurrency exchanges in Korea, including the market leader Upbit in December for problematic distribution of issued tokens and false information.

Trading of Wemix resumed two months later. However, its value plummeted, with many investors reporting massive losses.

Kim argued that he didn't make any profit from the investment as Wemix's value had dropped.

In a Facebook post last week, Kim argued he had invested 940 million won in the cryptocurrency in 2021 from the profit he earned by investing in LG Display stocks.

Kim claimed that he was only able to make 910 million won from the cryptocurrency, which was then reinvested in other cryptocurrencies, adding that he had made no additional profit.

However, in his 2022 personal financial disclosure report, which is required for all public servants, including high-level government employees and legislators, Kim reported a deposit of 960 million won.

A People Power Party (PPP) member argued that the additional 960 million won on Kim's reported wealth status contradicts his earlier explanation the money he recouped from Wemix was reinvested in other cryptocurrencies.

Kim previously noted that he didn't report any holdings that he had in cryptocurrency in his report because virtual assets disclosure is not required by law.

Kim also had to retract his earlier comments that he only liquidated 4.4 million won from the cryptocurrency investment and confess to withdrawing 800 million won, which he said was used for rent for his home.

Questions about how much Kim actually owns began to arise after his personal wealth increased substantially since he became a lawmaker. In 2021, Kim claimed his wealth was worth 1.18 billion won. This increased to 1.28 billion won in 2022 and grew to 1.53 billion won this year.

Media reports also questioned Kim's investment tactics and his connection with companies that issue cryptocurrencies, raising concerns about the possibility of insider information.

Most of the cryptocurrencies that Kim invested in were newly minted tokens by Korean companies that are less known in the market.

These tokens, after seeing a surge in value, have quickly plummeted.

Kim told his own party that he had received some of the tokens via "airdrops," which refers to free tokens that are given out by the issuers as a marketing ploy.

He argued that there had been nothing illegal as he participated in the marketing event under anonymity.

But it was also revealed that Kim owned tokens that were not yet traded on the market while proposing legislations that were in favor of some of the companies that issued the cryptocurrencies, which helped boost their value temporarily.

Kim is also alleged to have been active in cryptocurrency exchanges during the National Assembly's committee hearings.

Democratic Party Chair Lee Jae-myung apologizes to the public regardign Rep. Kim Nam-kuk's recent controversy at the party's meeting on Sunday in Yeouido, Seoul. [YONHAP]

The controversy surrounding Kim comes in addition to numerous other scandals the DP is facing.

DP Chair Lee Jae-myung is implicated in several scandals, including the Daejang-dong development project. The prosecution alleges Lee gave favors to help private contractors make huge profits when he was Seongnam's mayor.

Lee is also accused of taking some of those massive profits as political slush funds that were used in the party's primary in 2021, which saw him chosen as the DP's presidential candidate.

He is also accused of illegal corporate sponsorship of Seongnam's soccer club. The prosecutor's office is investigating the one-time sponsorship by companies such as Naver as bribery in disguise.

The DP chair is also implicated in the illegal wiring of money to North Korea through an underwear company owned by a former gangster, which the prosecutors' office sees as a political move to help Lee get an invitation to North Korea in hopes of gaining advantages for his presidential campaign.

The party is also swamped in another bribery scandal involving its previous leader Song Young-gil.

Recordings made by the party's former deputy secretary general Lee Jung-geun allege former Song played a central role in bribing members of his own party to become its leader during the 2021 convention.

Song returned from Paris last month to address the allegations. Of all of these scandals that the DP is facing, Kim's is deemed to have hit the DP the hardest, with its support tumbling since the allegations broke.

Until recently, Kim championed himself as a representative of the young generation that had faced struggle.

He had often claimed that he had lived on instant noodles because of his poverty-stricken situation and wore shoes until they were worn out because of his frugality.

According to a survey by Gallup Korea conducted from Tuesday to Thursday, the approval rating for DP remained unchanged from the previous week at 32 percent.

However, when broken down, support by those in their 20s dropped 12 percentage points from 31 percent in the previous week to 19 percent. Support from people in their 30s dropped 9 percentage points from 42 percent to 33 percent.

The DP was able to uphold its overall support due to an increase from those in their 40s, which went up 12 percentage points from 36 percent the previous week to 48 percent.

This was the second week that the PPP had more support than the DP. The PPP's rating remained the same as the previous week at 35 percent.

In hopes of turning the tide, DP leader Lee ordered the party to conduct its own investigation into the cryptocurrency scandal on Friday. On Sunday, it held an emergency meeting to discuss an overhaul.

“I am sorry,” said the DP Chair Lee Jae-myung on Sunday at the party’s emergency meeting.

The DP Chair Lee said the DP is not free from responsibility of the recent controversy especially of Rep. Kim, who has failed to be committed in his job as a lawmaker.

“I apologize for the concerns that were created by a lawmaker of our party,” Lee said while noting Kim’s announcement earlier in the day to leave the party.

However, during the meeting some of the DP lawmakers demanded that the emergency meeting be opened to the public.

“Unless it was a national security issue, such discussions have been always been opened to the public, Rep. Sul Hoon argued at the meeting. “But lately these discussions have been held behind closed door.”

Rep. Sul criticized that the party will lose the public’s support if it continues to discuss such important matters in secrecy.

"The departure from the party is a ploy to avoid responsibility," DP lawmaker Lee Won-wook said Sunday, noting that while Kim apologized to the DP, not to the public.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]