South Korean Prosecutors Launch Full-Scale Investigation into Kakao’s Former CEO
South Korean prosecutors are set to launch a comprehensive investigation into the former CEO of Kakao, a major tech company, over allegations of crypto embezzlement. The Seoul Southern District Prosecutors’ Office’s Virtual Asset Crime Joint Investigation Unit will handle the case, according to Chosun Ilbo. The investigation will target Kakao founder Kim Beom-su and other executives accused of embezzlement, breach of trust, and conducting fraudulent transactions that violate the Capital Markets Act.
Economic Democracy 21 Files Legal Case
Economic Democracy 21, a civic group, recently filed a legal case against Kim Beom-su and other key officials involved with Kakao’s Crust ecosystem and Ground X, its blockchain subsidiary. The group alleges that a small group of insiders at Kakao made illegal profits through illicit transactions involving the KLAY token. They claim that these individuals sold coins to investors but embezzled the funds instead of using them for their intended purpose.
Kakao’s Dominance in South Korea
Kakao is one of South Korea’s largest tech companies and operates KakaoTalk, the nation’s most popular chat app. The firm also runs KakaoBank, a neobanking operation that partners with a cryptocurrency exchange. Additionally, Kakao launched the KLAY token through its overseas subsidiaries and introduced a popular crypto wallet in 2020. Economic Democracy 21 alleges that certain officials within Kakao embezzled coins during a private pre-sale event before KLAY was listed on major exchanges.
Allegations of Misappropriation and Insider Trading
The civic group claims that Kim Beom-su and others may have misappropriated up to $223 million. They also accuse Klaytn managers of engaging in insider trading and siphoning off cryptoassets. Economic Democracy 21 asserts that these activities occurred when Klaytn was aiming to become the leading blockchain player in East Asia and had partnerships with prominent business groups like LG. Kakao affiliates have requested time to conduct internal investigations but have dismissed the allegations as baseless and one-sided.
Hot Take: South Korean Tech Giant Kakao Under Scrutiny for Crypto Embezzlement
Kakao, a prominent South Korean tech company, is facing a full-scale investigation by prosecutors over allegations of crypto embezzlement. The former CEO and other executives are accused of embezzlement, breach of trust, and fraudulent transactions. A civic group has filed a legal case, claiming that insiders at Kakao made illegal profits through illicit transactions involving the KLAY token. The group alleges misappropriation of funds and insider trading, especially during Klaytn’s efforts to establish itself as a leading blockchain player in East Asia. Kakao affiliates have denied the allegations but are conducting internal investigations. This investigation highlights the growing scrutiny of cryptocurrency-related activities in South Korea’s tech industry.
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