Hancom Scion Released on Bail in South Korean ‘Crypto Slush Fund’ Probe

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A South Korean court has released the son of software giant Hancom Group’s Chairman on bail as prosecutors continue to probe an alleged “crypto slush fund.”

Officials have been investigating allegations since 2021, when reports began surfacing surrounding the Hancom Group Chairman Kim Sang-cheol.

Kim Sang-cheol, prosecutors think, may be the “secret owner” of an altcoin named Arowana (ARW). The coin is supposedly the brainchild of a firm named Arowana Tech.

It was listed on the Bithumb exchange in mid-2021, but has since been delisted.

Hancom Investigation Continues

Hancom is best known in South Korea as the developer of Hancom Office, a widely used suite of word processors, spreadsheets, and presentation software.

The office suite was first released in 2001. It has since become a mainstay in the South Korean corporate world.

Per Yonhap, the Criminal Division of the Seongnam Branch of the Suwon District Court arrested and indicted Kim’s 35-year-old second son.

The younger Kim will be tried on charges of violations of the Act on the Aggravated Punishment of Specific Economic Crimes and breach of trust.

The court has also decided to grant bail to an individual surnamed Jeong (47 years old). Jeong was described as the CEO of Arowana Tech.

Police arrested the younger Kim on December 5, and held him in custody for 111 days later. Prosecutors expressed their concerns about the suspects’ flight risk.

But the court eventually decided to grant bail at just under $375,000.

The court also imposed restrictions on both the younger Kim and Jeong’s residence and movements ahead of the trial.

Prosecutors think that “from December 2021 to June 2023,” the younger Kim and Jeong enlisted the aid of a “domestic virtual asset consulting company.”

The prosecution said that the duo asked the company to swap ARW 14.57 million for Ethereum and Bitcoin holdings.

Suspects ‘Enlisted Help of Overseas Crypto Firm’

Investigators think the company raised almost $6 million “excluding fees” from the sale, and then transferred the ETH and BTC coins to the younger Kim’s “personal electronic device.”

Prosecutors also say they have evidence that “an overseas cryptoasset business” was “asked to sell 4 million Arowana tokens” on the younger Kim’s behalf.

Investigators said the “overseas” firm raised around $1.2 million in crypto from this deal. The coins, prosecutors said, were also transferred to the younger Kim’s wallet.

Investigators said the younger Kim “used the slush fund for personal purposes,” including buying non-fungible tokens (NFTs).

Prosecutors also think the suspect used the find to trade, pay credit card bills, and buy goods from department stores.

Hancom With, Hancom’s blockchain arm, is a known backer of Arowana Tech. The affiliate invested in Arowana Tech in April 2021, with a view to building a blockchain-powered gold trading business.

In a transcript released by a suspected whistleblower in October 2021, Kim Sang-cheol appeared to state that he “owned” Arowana Tech.

Hancom has disputed the veracity of the transcript. Police raided Kim Sang-cheol’s home and Hancom offices in October 2022 as part of the long-running probe.

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