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Thailand's financial regulator is strengthening its oversight of crypto exchanges. The Securities and Exchange Commission (SEC) has filed a police complaint against Bitkub Online, one of the country's largest crypto exchanges, and two of its former executives. They are suspected of providing false information about client assets, which could result in both administrative and criminal liability.

The case stems from events in May 2021, when hackers attacked Bitkub's systems, resulting in the loss of approximately 1.7 billion baht (approximately $50.4 million) worth of cryptocurrency by users. This hack was one of the most significant in the history of the Thai crypto market.

However, the regulator's main concerns relate not to the incident itself, but to the exchange's reporting of it in its financial statements. Between May and October 2021, Bitkub filed documents with the SEC that completely omitted any mention of customer financial losses. The lack of information about the amounts stolen and the impact on the exchange's equity, according to the SEC, indicates intentional misrepresentation of user funds and misleading regulators.

Notably, Bitkub subsequently recovered the stolen assets, but this occurred after the filing of the financial statements. In the documents submitted to authorities, the exchange not only concealed the losses but also failed to disclose details of the compensation and measures taken to prevent similar incidents. The SEC considers this a deliberate concealment of information that goes beyond a technical error.

The complaint places particular emphasis on former directors Sakolkorn Sakavee and Taweesap Rawan, who were responsible for the accuracy of the reports. The regulator claims they were aware of the losses but intentionally failed to make the appropriate adjustments. Their actions will be investigated for possible intent to conceal material information.

The case has been referred to the Economic Crimes Suppression Division. Police will review the materials and decide whether to initiate criminal proceedings. A conviction would mark the first criminal prosecution of a crypto exchange in Thailand for reporting violations.

Although the affected clients were compensated for their losses, the SEC insists on the exchange's obligation to inform the regulator of all events affecting its financial stability. This case demonstrates the Thai authorities' tightening approach to regulating cryptocurrency exchanges, which are now treated on par with banks, with mandatory transparency standards.

The situation poses serious reputational risks for Bitkub. If criminal proceedings are instituted, the company and its former executives face fines and possible imprisonment. This could also negatively impact trust in the Thai crypto market as a whole.