South Korean Court Upholds Hancom ‘Altcoin Slush Fund’ Scion’s 3-Year Jail Term
The South Korean High Court has upheld the jail term of the son of the CEO of software giant Hancom after the latter was found guilty of creating a $6.7 million altcoin “slush fund.”
Suwon District Court sentenced Kim Sang-cheol’s second son (first name withheld for legal reasons) to jail for three years in August this year.
Exec Fostered Altcoin Slush Fund, Prosecutors Explain
The younger Kim appealed the verdict at the High Court. But his legal team failed to convince the court to change his sentence.
He was found guilty of conspiring with Arowana Tech, an IT startup that had received substantial Hancom backing, to create a slush fund using the former’s Arowana (ARW) tokens.
The District Court found the younger Kim guilty of breach of trust violations under the Specific Economic Crime Aggravated Punishment Act.
The same court also sentenced a 48-year-old Arowana Tech executive surnamed Jeong to two and a half years in prison.
iNews24 reported that the Suwon High Court’s Criminal Division dismissed appeals from the younger Kim and Jeong’s legal teams on December 11.
It also dismissed counterarguments from the prosecution, who asked the court to extend the jail sentences.
Prosecutors had also also asked the High Court to impose further fines on the duo.
The presiding High Court judge said:
“It is hard to say that the District Court’s sentencing was anything other than reasonable. And there appears to be no reason to change the sentence. We cannot accept the arguments from the defendants and the prosecution.”
Price Manipulation Accusations
Prosecutors had hoped to extend the younger Kim’s jail sentence to nine years, and Jeong’s to six years.
The prosecution service also accused Hancom With, Hancom’s blockchain arm, of conspiring with Arowana Tech to “manipulate” ARW prices.
Prosecutors claimed that the defendants traded Arowana tokens between 2021 and 2022 to raise money for the “slush fund.”
The coin rose in value suddenly on April 20, 2021, after it was listed on domestic crypto exchanges.
It has since been delisted, but its meteoric x1,075 rise drew immediate suspicion from investigators.
The token’s price shot up from $0.035 to just under $38 within the space of just 30 minutes after it was listed.
The prosecution has argued that the younger Kim “and others” had “the authority” to “withdraw” ARW tokens.
NFT Spending Spree
It also said the defendants “violated their official duties” and used the slush funds to buy NFTs, invest in stocks, pay off credit card bills, and buy goods in department stores.
The prosecution is also hopeful of bringing the senior Kim to trial. In July, the service applied for an arrest warrant.
But a court dismissed the application. The ruling judge explained that the senior Kim did not “pose a flight risk.”
Hancom is currently run by the senior Kim’s eldest daughter Kim Yeon-soo. The firm has repeatedly denied that it has “anything to do with the slush fund scandal.”
Kim Yeon-soo is reportedly “pushing for management reform,” and iNews24 noted, hopes to “reorganize the firm’s board of directors.”
Hancom’s core business is software development. In South Korea, it is most famous for developing the Hangeul word processor program and the popular Hancom Office Suite.