The so called “mediation” association, whose main purpose is to represent the industry and mediate conflicts among its members, is working up its efforts in selling tokens jointly with a company founded by the President of the Association. It is feeding off from its title “Association” and its reputable members comprised of professors.
“As mentioned in our Association’s name, our main role is ‘mediation,’ and unlike other associations, we will walk our talk,” said Kim Seung-jin, the Director of the Korea Blockchain Mediation Association (KBMA).
He pointed to KBMA’s “mediation skills” and “actions” as the differentiating factors that set them apart from other associations.
KBMA also boasted its vast network of internationally renowned scholars, including the Futurist John Clippinger and Chairman Ben Goertzel of the Artificial General Intelligence Society.
◆Chairman Park Ki-hoon establishes U&F Solution and spearheads token sales
Chairman Park Ki-hoon of KBMA is pushing ahead with selling tokens, including Momentum Token and Swytch Token, overshadowing the big promise that KBMA made.
Also, he is listed as the CEO of U&F Solution (U&F) in the Certified Copy of Corporate Registration. The company promotes knowledge and information exchange by inviting futurists, AI experts and solar photovoltaic experts.
In October 2017, Professor Ben Goertzel held a briefing session on SingularityNET token during an event that was hosted by U&F in Dong-gu, Daegu City. Also, John Clippinger, Co-Founder of Swytch Token and Professor at MIT Media Lab, visited Korea with Co-Founder Evan Caron and talked about Swytch Token.
U&F and TokenWorld, where Chairman Park holds the position of CEO and Vice-President, respectively, have been leading ICO token sales for Swytch and Momentum since March. When the sales began, the Association and TokenWorld were two separate entities on surface. And Chairman Park was their only link.
However, according to a source from the Association, TokenWorld, which played the middleman role for the ICO sales, is expected to become part of the Association by the end of this year. In other words, the entities will no longer be separated even in form.
“We currently work for U&F Solution and our CEO is the Chairman of that Association (KBMA). With the establishment of the Association, running TokenWorld separately became unnecessary, which is why it is being absorbed into the Association,” said A, an employee of TokenWorld.
◆Not included in the list of purposes for establishing an incorporated association…but acting as a “for-profit” ICO organization?
Experts point out that it is illegal for incorporated associations to pursue profits that “are not in align with their incorporation purposes” as they are non-profit organizations.
On its homepage website, KBMA introduces itself as an “incorporated association” along with a unique identification number. However, it is yet to be approved by the Ministry of Science and ICT. KBMA’s list of businesses include: ▲ Policy and institution research, ▲ Research support and business search, ▲ Academic exchanges and talent nurturing, ▲ Blockchain technology authentication, and ▲ International blockchain cooperation, among others. And, ICO is not in the list.
“ICO sales would not be an issue, if it fits with the purpose and aim of the Association’s establishment. However, if ICO sales are used as a means to make profit, even though the approval for the association’s establishment was made for research, academic exchanges, technology authentication, and talent nurturing, then it can become a problem,” said Song Inkyu, Professor of Korea University.
“As of now, there are no associations that earned the official approval to partake in ICO sales. So, it is even more startling that a mediation association is doing so. What we first need in place are ICO related laws,” he added.
“Currently, there are many organizations that call themselves an association without meeting the requirements to become one. If a non-profit organization acts against its founding purpose, then its operation approval may be withdrawn,” said Kang Sung-sin, Attorney at Law in Haenae Law Firm.
Incorporated association is a type of non-profit organization that aims to boost the welfare of the society as a whole. As of Oct 10th, there are only two blockchain related associations that were formally approved as an incorporated association by the Ministry of Science and ICT, namely: Korea Blockchain Industry Promotion Association and Open Blockchain Industry Association.
◆Doing business with member donation funds and pursuing multi-level marketing are a violation of the Criminal Act and the Door-to-Door Sales Act
The problem with KBMA is that the Chairman’s personal businesses are being carried out using members donation funds and a multi-level marketing scheme. These can be a violation of the Criminal Act and the Door-to-Door Sales Act.
There are speculations from within Association that the Chairman is using member donations as seed money for his personal work.
“Incorporated associations cannot generate profit, so (KBMA) runs on member donations,” said A, adding “One way to reciprocate members is to provide (ICO related) information.”
However, there is more. The method in which TokenWorld engages in exclusive ICO sales is another problem. In March, Momentum Token ICO was secretly carried out in various communities by TokenWorld, which collected KRW 600,000 cash from investors per Ether.
According to the Investment Letter that DailyToken acquired, the written pre-sale period was from March 23rd to 31st.
Investors either paid extra cash or received extra tokens for any value difference incurred, depending on the change in the market value of Ethereum on the 31st, the last day of pre-sale, compared to March 23rd, when investors paid KRW 600,000 per Ether.
In times like now, where a token’s value cannot be measured, this kind of a method can lead to investors purchasing extra tokens unwillingly.
Ethereum’s value dropped from KRW 585,000 on March 23rd to KRW 444,000 on March 31st, drawing a downward curve. Typical ICO sales give out a set amount of tokens per Ether.
The Investment Letter of Momentum Token says that the token was supposed to be listed in late-May, but currently it is uncertain whether it will actually get listed or not. Moreover, the ICO in-and-of-itself is not over yet.
◆ Leveraging the fame of “renowned scholar and professor pool” have lead tokens to sell like hot cakes
Despite the fact the token pricing conditions are unfavorable for investors and the token’s listing is still uncertain, Momentum and Swytch tokens are selling like hot cakes. It is all thanks to the rising popularity of the Association members comprised of “scholars” and the use of the phrase “Professor Validated.”
It is easy to witness how much influence Professor Park Youngsook of Ewha Women’s University can have in TokenWorld community. For example, Momentum Token’s private sale posting said “TokenWorld only deals with ICOs that have been verified by Token Commons Foundation in the U.S. and Professor Park Youngsook, a Korean Futurist.”
Professor Park is a well-known Korean Futurist, who currently serves as the Chair of Korea Office of UN Future Forum. She is also an Advisor to Swytch Token, and recently emceed and interpreted a cryptocurrency related event hosted by U&F early this year.
Also, when Eyal Oster, Founder of Momentum Token, came to Korea in March and presented Momentum Token, Professor Park attended the event as an interpreter. On Oct 4th, UN Future Forum hosted an event, where Eyal Oster and Arien Luedi, Chairman of Momentum Token, attended. Professor Park is also the Vice-President of Business Development Department at Swytch Token.
“Listing is being delayed due to the on-going efforts to forge a technology partnership between Swytch Token and Momentum Token by Professor Park,” said employee B of TokenWorld, adding “Professor Park joined the Korea Blockchain Association (Chairman Chin Dae-je).”
To this Park responded, “I have nothing to do with the token sales,” adding “The two companies are working together, and even if many tokens do not last and disappear, these (Swytch and Momentum) tokens will not. Listing appears to be being delayed due to bad market conditions.”
Translated by Cha Soo-jin