BKCoin Crypto Hedge Fund Shakeup: Co-Founder Kevin Kang Ousted Over $12M Asset Diversion

The cryptocurrency hedge fund sector faced another credibility crisis in late 2022 when BKCoin terminated co-founder Kevin Kang following allegations that he diverted $12 million in assets from the firm’s multi-strategy investment funds. Court filings from Miami-Dade County’s 11th Circuit Court, dated October 28, 2022, revealed the extent of the internal governance failure at the Miami-based crypto hedge fund founded by Carlos Betancourt and Kang just four years earlier. The documents show that six U.S. and foreign business entities—investors in the affected multi-strategy funds—collectively stand to lose over $18 million that they now seek to recover through legal proceedings.

How a Crypto Hedge Fund Lost Control of $12 Million

BKCoin Management LLC filed the legal complaint against Kang on October 28, 2022, just two weeks after his employment termination on October 14. The core allegation centers on the improper diversion and commingling of cash and other assets destined for three multi-strategy funds. Rather than keeping investor capital segregated as required by fund structures, the funds’ capital was allegedly transferred into accounts controlled by affiliated entities—BKCoin Management LLC, BKCoin Capital LP, and BK Offshore Fund Ltd—where it was combined with other holdings under Kang’s management.

The scale of BKCoin’s predicament became clearer when the company admitted it lacked sufficient financial and operational resources to independently manage and recover the funds. This admission prompted the court to appoint Michael I. Goldberg from law firm Ackerman LLP as a temporary receiver, granting him authority to oversee the disputed assets, execute transfers to secure accounts, and potentially liquidate cryptocurrency holdings if necessary to preserve value.

Carlos Betancourt’s Crypto Fund Faces New Realities

The BKCoin story underscores the risks within the crypto hedge fund landscape. Founded by Carlos Betancourt and Kang in 2018, BKCoin had grown to manage approximately $150 million across at least five distinct funds and multiple separately managed accounts, according to a Business Insider profile from June 2022. The firm operated multiple investment vehicles to serve institutional clients, but the internal controls that should have protected these structures proved insufficient.

Goldberg’s initial examination of the funds revealed systematic commingling: capital deposited on behalf of investors was immediately transferred into affiliated entity accounts rather than maintained separately. This pattern suggests either deliberate mishandling or catastrophic internal control failures. The receiver’s mandate was expanded to cover all three affiliated legal entities and extended to include authority to transfer any cryptocurrency assets and convert holdings to U.S. dollars if needed.

Legal Process Unfolds: Court-Ordered Recovery Mechanism Activated

Under court supervision, the receiver began the formal process of assessing the situation and charting a recovery path. According to the court order, Goldberg was required to submit a comprehensive report by January 4, 2023, detailing the steps taken, a complete accounting of all assets and liabilities across the funds and affiliated entities, and an assessment of whether the funds could continue operating in a legal and profitable manner going forward.

An initial case management conference was scheduled for January 27, 2023, to address the next phase of proceedings. The legal framework provided structure to what had become a chaotic situation: investors uncertain about their capital, a fund management company fractured by internal conflict, and significant cryptocurrency holdings in limbo pending resolution.

Multi-Strategy Fund Investors Left Seeking Answers

The six institutional investors in BKCoin’s multi-strategy funds now face an uncertain recovery timeline. Their collective $18 million investment became frozen in legal proceedings as the temporary receiver worked to untangle the asset commingling. For crypto fund investors, the BKCoin case illustrated a critical vulnerability: even funds with significant asset bases and established structures can suffer catastrophic governance failures that jeopardize capital preservation.

The broader crypto hedge fund industry watched this dispute unfold as a cautionary tale about operational oversight and internal controls. BKCoin’s case demonstrated that size alone—with $150 million under management—does not guarantee the robust governance structures necessary to protect investor assets in this emerging asset class. As the legal process continued, investors and market observers awaited the receiver’s findings and the court’s ultimate determination regarding asset recovery and the fund’s viability.