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Police investigate Balaan CEO for fraud

Published: 09 Apr. 2025, 21:41

Choi Hyung-rok, CEO of Balaan, attends the Seoul Bankruptcy Court in southern Seoul on April 3. [YONHAP]

Police launched an investigation on Wednesday into Choi Hyung-rok, CEO of luxury goods e-commerce platform Balaan, after a group of sellers filed criminal complaints accusing him and two other company officials of fraud, embezzlement and breach of trust.

Balaan, the leader in the luxury goods e-commerce industry, failed to pay sales proceeds to its vendors on March 24.

Twenty sellers who had listed products on Balaan submitted a formal complaint on Wednesday, requesting prosecution of three people including Choi, according to the Gangnam Police Precinct.

The sellers allege that Balaan promised to safeguard sales revenue through a third-party settlement service after a high-profile payment default involving TMON and WeMakePrice last July, which totaled an estimated 1.85 trillion won ($1.25 billion.) That commitment, they claim, was not fulfilled.

“Balaan actively encouraged sellers to sign up for the advertised product right up until the settlement delay crisis,” the plaintiffs said. “We suspect that Balaan may have acted with prior intent.”

“There is a risk the suspects may flee, so we strongly urge authorities to impose travel bans and conduct a full investigation,” said attorney Cho Beom-seok, who represents the group of sellers.

A sign at the lobby of luxury goods e-commerce platform Balaan's headquarters in Gangnam District, southern Seoul reads that all employees are working remotely on April 1. [NEWS1]

Multiple police stations across the country have received similar complaints against Choi. Suwon Nambu Police Precinct issued a travel ban against him on Monday.

“I sincerely apologize for the concern caused by the delayed settlements,” Choi said in an apology issued on March 28. “Management and shareholders, including myself, are considering all options to resolve the issue and normalize services.”

Industry estimates put Balaan’s unpaid balances at around 13 billion won. The company currently hosts roughly 1,300 partner brands and sellers. Financial disclosures show Balaan’s accumulated deficit rose from 66.2 billion won in 2022 to 78.4 billion won in 2023.

Seoul Bankruptcy Court accepted Balaan’s application to begin rehabilitation proceedings on Friday, which the company had filed on March 31. The court will decide whether to approve the rehabilitation plan once it is submitted. If the court deems the company unviable, it could proceed with liquidation.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY LEE YOUNG-KEUN [[email protected]]