‘Merge Point’ CEO Siblings “We Are a Platform Company”…Deny Charges in First Trial

Key Issue in Trial Over Deficit Roll-Over
Merge Side: "Accepting Deficits Is an Industry Trend"

Amid concerns over significant losses for many affiliated individual business owners, excluding large retail corporations prepared for compensation due to the massive refund crisis of the payment platform Merge Point, the headquarters of "Merge Point" in Yeongdeungpo-gu, Seoul, on the 18th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporters Byungdon Yoo and Gyumin Oh] The brother and sister who are the representatives of Merge Plus, the operator of 'Merge Point,' accused of causing a large-scale refund suspension incident, denied the charges at their first trial. Throughout the trial, they maintained the position that "we are a platform company."

The Criminal Division 11 of the Seoul Southern District Court (Presiding Judge Seong Bo-gi) held the first hearing on the morning of the 8th at 11 a.m. regarding the charges of fraud and violation of the Electronic Financial Transactions Act against Namhee Kwon (37), CEO of Merge Plus, and her younger brother Bokun Kwon (34).

At the trial, when the court asked the defense lawyers, "If you give a 20% discount, you will continue to incur losses, so isn't this essentially a Ponzi scheme?" they responded, "Because we are a platform company, we accept losses for a considerable period to increase transaction volume," adding, "We planned to restructure our revenue model through a 'VIP subscription service' with a monthly fee of 15,000 won, allowing customers to receive a 20% discount while we generate profits."

They further explained, "Although we naturally incur losses due to the 20% discount, as the scale grows, the so-called 'lock-in effect' occurs, making it difficult for vendors to operate outside our platform, which we could sufficiently manage."

The sibling's defense also denied the fraud charges, stating, "We were making good profits, but the Financial Supervisory Service exposed us as an unregistered company on August 11 last year, leading to a shutdown."

Additionally, when the court asked about the difference between Merge Plus and other delivery platforms, Mr. Kwon directly stated, "We helped restaurant owners have more frequent opportunities to sell food," and added, "If economies of scale are achieved, selling at 8,000 won can be more profitable than selling at 10,000 won."

After the trial, the defense also told the press, "Because we are a platform company, we are not obligated to register as a financial business," denying the charges of violating the Electronic Payment Agency Act.

Moreover, during the trial, disputes continued over the scale of damages. The prosecution estimated the damage at 250 billion won, while Merge Plus claimed the refund standard was 50 billion won.

The court stated, "The sales proceeds of Merge Point calculated by the prosecution based on May 1, 2020, amount to 250 billion won," and added, "The unpaid Merge Money (refund amount) is 70 billion won (refund standard 50 billion won)," requesting both sides to provide specific calculation criteria.

Namhee Kwon and her brother Bokun Kwon are accused of defrauding 560,000 victims by selling approximately 252.1 billion won worth of 'Merge Money' through a Ponzi scheme business method from June 2018 to August last year. They are also charged with operating an electronic payment agency without registering with the Financial Services Commission from January 2020 to August last year by recruiting members through a prepaid method.

Mr. Kwon is also accused of embezzling about 6.6 billion won from Merge Office funds, in collusion with their sibling and Merge Office CEO, Mr. Kwon Mo, using the money for credit card payments, stock trading funds, and personal church donations.

Their second trial is scheduled for 11:10 a.m. on the 3rd of next month.

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