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South Korean Judiciary Confirms 3-Year Prison Sentence for Heir of Hancom’s ‘Altcoin Slush Fund’
The High Court of South Korea has confirmed the prison sentence of the son of the CEO of software company Hancom after he was convicted of establishing a $6.7 million altcoin “slush fund.”
The Suwon District Court sentenced the second son of Kim Sang-cheol (first name withheld for legal reasons) to three years in prison in August of this year.
Executive Created Altcoin Slush Fund, Prosecutors State
The younger Kim appealed the ruling at the High Court. However, his legal representatives were unable to persuade the court to alter his sentence.
He was found guilty of collaborating with Arowana Tech, an IT startup that had received significant support from Hancom, to establish a slush fund utilizing Arowana (ARW) tokens.
The District Court determined that the younger Kim had committed breach of trust offenses under the Specific Economic Crime Aggravated Punishment Act.
A branch of the Suwon District Court. (Source: Yonhap TV News/YouTube/Screenshot)
The same court also sentenced a 48-year-old executive from Arowana Tech, identified by the surname Jeong, to two and a half years in prison.
iNews24 reported that on December 11, the Criminal Division of the Suwon High Court rejected appeals from the legal teams of both the younger Kim and Jeong.
The court also dismissed counterarguments from the prosecution, which sought to lengthen the prison sentences.
Prosecutors had additionally requested that the High Court impose further fines on both individuals.
The presiding judge of the High Court stated:
“It is difficult to assert that the sentencing by the District Court was anything but reasonable. There seems to be no justification for altering the sentence. We cannot accept the arguments from either the defendants or the prosecution.”
Main opposition set to file new motion to impeach Yoon over martial law declaration https://t.co/WqEVdqOf2P
— The Korea Times (@koreatimescokr) December 11, 2024
Allegations of Price Manipulation
Prosecutors aimed to increase the younger Kim’s prison term to nine years, while seeking six years for Jeong.
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The prosecution also accused Hancom With, the blockchain division of Hancom, of colluding with Arowana Tech to “manipulate” ARW prices.
Prosecutors alleged that the defendants traded Arowana tokens between 2021 and 2022 to fund the “slush fund.”
The coin experienced a sudden surge in value on April 20, 2021, following its listing on domestic cryptocurrency exchanges.
Although it has since been delisted, its dramatic increase of x1,075 raised immediate concerns among investigators.
The token’s price escalated from $0.035 to just below $38 within a mere 30 minutes after its listing.
The prosecution contended that the younger Kim “and others” had “the authority” to “withdraw” ARW tokens.
Oh promises safety, festive atmosphere amid mounting tourism concernshttps://t.co/yK6ayxhAKj
— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) December 11, 2024
NFT Expenditure
It was also stated that the defendants “violated their official duties” and utilized the slush funds to purchase NFTs, invest in stocks, settle credit card debts, and acquire items from department stores.
The prosecution is also optimistic about bringing the senior Kim to trial. In July, they sought an arrest warrant.
However, a court rejected the request, with the ruling judge indicating that the senior Kim did not “pose a flight risk.”
Korea’s rich and powerful families are facing a revolt of their own as the country reels from the political fallout over a brief martial law.
Read The Big Takehttps://t.co/Zh6GyxheVO
— Bloomberg Asia (@BloombergAsia) December 11, 2024
https://t.co/Zh6GyxheVOCurrently, Hancom is managed by the senior Kim’s eldest daughter, Kim Yeon-soo. The company has consistently denied any involvement in the slush fund scandal.
Kim Yeon-soo is reportedly “pushing for management reform,” and iNews24 noted her intentions to “reorganize the firm’s board of directors.”
Hancom’s primary business is software development. In South Korea, it is best known for creating the Hangeul word processor and the widely used Hancom Office Suite.
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