Software company Hancom Group Chairman Kim Sang-cheol is currently under investigation for allegedly accumulating illicit funds worth tens of billions of Korean won through the use of Arowana (ARW) tokens. South Korean prosecutors have initiated a thorough review of the case following a series of investigations and raids that commenced in 2021.
The Arowana token is closely associated with Hancom With, a blockchain subsidiary of the Hancom Group. Reports suggest that the blockchain firm has made significant investments in Arowana. The token made its debut on the South Korean crypto exchange Bithumb on April 20, 2021. In a remarkable turn of events, within just 30 minutes, the price of ARW skyrocketed from 50 won to 53,800 won, marking a staggering 1,075-fold increase.
Concerns surrounding market manipulation have emerged in light of the token’s unprecedented surge. Despite denials from Hancom, Arowana, and Bithumb, local law enforcement authorities have launched an investigation into the matter. Furthermore, Kim has been accused of siphoning off substantial funds through the token.
In October 2021, leaked phone conversations purportedly exposed Kim’s involvement in establishing a covert slush fund. The leaked recordings allegedly contained incriminating evidence of Kim asserting ownership of Arowana through a clandestine agreement. However, Arowana refuted these claims, contending that the phone calls had been tampered with and maliciously edited.
As the investigation unfolds, South Korea has taken steps to bolster its regulatory framework in the crypto space. The country recently enacted its inaugural user protection law aimed at combatting illicit crypto activities. The Financial Supervisory Service (FSS) of South Korea intends to enforce stringent regulations through a collaborative response mechanism to address the escalating threats in the crypto sector.
Moreover, the Financial Services Commission (FSC) has sanctioned the establishment of the Digital Asset Protection Foundation, an entity designed to safeguard customers’ assets, particularly in the event of an exchange collapse. The foundation is tasked with facilitating the seamless return of assets to customers even in the event of an exchange failure.
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