South Korean police conducted a search and seizure of local software company Hancom Inc. offices and the home of Hancom Group chairman Kim Sang-cheol on Thursday amid speculation that Kim created a slush fund using profits from South Korea-based crypto token Arowana (ARW), according to local media reports.

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Fast facts

  • Hancom With, Hancom’s blockchain subsidiary, had invested in Arowana Tech, the issuer of Arowana token, prior to its listing on local exchange Bithumb, which took place in April 2021. Hancom and Arowana set out to create a mobile application allowing users to purchase gold with a digital voucher.
  • The Arowana token grew 1,076 times in price from 50 Korean won (currently US$0.03) to about 53,800 won (currently US$37.45), about 30 minutes after being listed on Bithumb.
  • Multiple local media reports speculated that the price skyrocketed as a result of price manipulation after consulting Bithumb to land on a specific listing schedule. While Hancom, Arowana and Bithumb have denied such allegations, local police have been investigating Kim under embezzlement charges.
  • Local news outlet JTBC also released a report in October 2021 containing a recording of Hancom chair Kim in a phone call allegedly giving instructions on creating a slush fund, saying that he owns Arowana in a back-door contract. Arowana released a statement saying that the recording had been maliciously edited by the informant. 
  • A parliamentary audit, conducted by lawmakers at the National Assembly earlier this month, summoned former Bithumb chairman Lee Jung-hoon to testify on the Arowana allegations. While Lee did not show up to the auditing session, he has been summoned once again to testify before the lawmakers next week.
  • South Korea’s parliamentary audit is an annual event during which lawmakers examine the presidential administration and government agencies by questioning respective government department heads and relevant witnesses.

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