Hancom States "Company Not Involved" in Chairman Kim Sangcheol's 9 Billion KRW Cryptocurrency Slush Fund Case

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On April 24, Hancom issued an official statement under the names of CEOs Byun Sungjun and Kim Yeonsu, following the indictment of Chairman Kim Sangcheol on charges of creating slush funds worth approximately 9 billion KRW using the company's cryptocurrency, Arowana Token. The statement clarified, "This is a matter related to an individual, and Hancom has never been involved in the relevant business." The company also added, "The businesses and plans that Hancom is currently pursuing are proceeding without disruption, regardless of this incident, and will not be affected in the future."

According to investigative authorities on the same day, the Criminal Division 3 of the Seongnam Branch of the Suwon District Prosecutors' Office (headed by Chief Prosecutor Kang Sunggi) indicted Chairman Kim without detention the previous day on charges including breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. Chairman Kim is accused of disguising the company's cryptocurrency Arowana Token as necessary for business purposes between December 2021 and October 2022, selling it, and then disposing of approximately 9.6 billion KRW worth of virtual assets such as Bitcoin acquired from the sale without authorization. He allegedly transferred these assets to his son's name and used them for personal purposes.

He is also facing charges of embezzlement for allegedly misappropriating 250 million KRW and 240 million KRW of affiliate funds, respectively, for the acquisition of stocks under borrowed names and for paying false salaries to acquaintances between April 2019 and May 2022. Investigators believe that Chairman Kim led the entire "cryptocurrency slush fund creation case."

Arowana Token is a cryptocurrency in which Hancom With, a blockchain-specialized affiliate of the Hancom Group, has invested. Arowana Tech, a cryptocurrency management company acquired with Hancom Group funds, issued a total of 500 million Arowana Tokens. The company promoted it as a digital asset that could be used on six major digital financial business platforms. Arowana Token is currently delisted. On April 20, 2021, just 30 minutes after its initial listing, its price soared from the initial trading price of 50 KRW to 53,800 KRW, 1,075 times higher, raising suspicions of price manipulation.

Kim's son (the second son), who is also an internal director at Hancom With, and Jung, the CEO of Arowana Tech, who were previously indicted and detained for their involvement in the cryptocurrency slush fund case and charged with breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, were each sentenced to three years and two years and six months in prison, respectively. Chairman Kim was also indicted without detention in January of this year for violating the Capital Markets Act by failing to properly report changes in stock ownership between 2019 and 2020. On April 4, the Seongnam Branch of the Suwon District Court sentenced him to a fine of 20 million KRW in the first trial, and the appeal is ongoing.

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