Software company Hancom Group Chairman Kim Sang-cheol is under investigation for allegedly amassing illicit funds worth tens of billions of Korean won using Arowana (ARW) tokens. South Korean prosecutors are now reviewing the case following a series of investigations and raids that began in 2021.
The Arowana token is linked to Hancom With, a blockchain subsidiary of the Hancom Group. Reports indicate the blockchain firm has significantly invested in Arowana. The token launched on the South Korean crypto exchange Bithumb on April 20, 2021. Within 30 minutes, the ARW price soared from 50 won to 53,800 won, a 1,075-fold jump.
Market Manipulation Concerns and Allegations
The staggering rise of the token has raised concerns about market manipulation. Although Hancom, Arowana, and Bithumb denied the allegations, local police launched an investigation. Additionally, Kim was accused of embezzling massive funds through the token.
In October 2021, leaked phone calls allegedly revealed Kim’s involvement in setting up a secret slush fund. The recordings supposedly contained evidence of Kim claiming ownership of Arowana through a clandestine contract. However, Arowana disputed the allegations, claiming the call recordings were manipulated and edited with malicious intent.
South Korea’s Tightening Crypto Regulations
The investigation continued as South Korea strengthened its regulatory framework. Recently, the country passed its first user protection law to combat illicit crypto activities. The country’s Financial Supervisory Service (FSS) plans to implement stringent regulations using a joint response system to address increasing crypto threats.
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Additionally, the Financial Services Commission (FSC) authorized the Digital Asset Protection Foundation, an organization created to safeguard customers’ assets, especially if an exchange fails. The foundation will ensure the successful return of assets to customers even if the exchange collapses.
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