South Korean legal authorities are intensifying their investigation into accusations involving Kakao former Chairman and key executives from affiliated firms over purported misuse of digital currencies. On October 11th, the Joint Virtual Asset Crime Investigation Team of the Seoul Southern District Prosecutor’s Office initiated a formal inquiry into the matter. This action followed a report filed by Economic Democracy 21 last month.
The activist group claims that ex-Kakao chairman Kim Bum-soo and various branch executives participated in embezzlement and breached trust related to cryptocurrency dealings.
These allegations are based on Kakao’s creation and sale of the virtual currency $KLAY via its subsidiary. The allegations suggest that the sales proceeds didn’t go to the intended business but were instead misappropriated. Early estimates suggest a potential misappropriation of between 150 billion won and 300 billion won during the $KLAY pre-sales.
The organization further alleges insider trading, accusing Klaytn branch managers of siphoning off the cryptocurrency under various guises. They purportedly publicized an “overseas investment project”, only for these investments to land in a subsidiary company’s pockets.
Kakao’s subsidiary, Klaytn, which later rebranded as Crust, introduced the digital currency Klay. Notably, its market capitalization had at one point soared beyond 10 trillion won, marking it as a potent player in South Korea’s burgeoning cryptocurrency landscape. However, allegations of insider trading and operational missteps have triggered a sharp decline in its value.
In response to these claims, representatives from Kakao and Klytn expressed their reservations and indicated they still need to verify much of the information. They emphasize that many of the accusations stem from unverified, one-sided narratives.
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