[Exclusive] P2P Company ‘Siso Funding’ Repayment Delay, Police Investigation Launched

Repayment Delayed for Over 30 Products Scheduled for Principal Payment... Over 800 Investors Affected

Investors Filing Individual Complaints... Some Preparing Class Action Lawsuits

Illustration by Youngwoo Lee 20wo@

[Asia Economy Reporter Yoo Byung-don] The police have launched an investigation into the principal repayment delays at the online investment-linked finance (P2P) company Siso Funding.

On the 9th, the Yeongdeungpo Police Station in Seoul announced that it had received complaints from investors against Siso Funding on the 18th of last month and had begun an investigation.

Earlier, Siso Funding had posted a notice on its website apologizing for causing concern to investors due to multiple repayment delays. The delayed products numbered around 30. Siso Funding, a P2P company operating for five years, has recorded cumulative loans of 346.8 billion KRW. As of the 18th of last month, when the company announced the repayment delays, the outstanding loan balance was 47.8 billion KRW.

Investors who have not received their principal and interest payments on time are coordinating their response strategies through online communities such as Naver Cafes and KakaoTalk open chat rooms. It is reported that more than 800 investors are currently participating in the KakaoTalk open chat room. Some are reportedly preparing collective action by forming litigation groups.

Prior to this, some investors individually filed complaints against Siso Funding at the Yeongdeungpo Police Station, accusing the company of fraud and other charges. A Yeongdeungpo Police Station official stated, "Only individual complaints, not collective ones, have been received," adding, "We cannot disclose exact details as the matter is under investigation."

Meanwhile, recent fraud and repayment delay incidents at top-tier P2P finance companies have caused anxiety among investors. Many companies with cases of insolvency are currently facing lawsuits.

A representative example is Blue Moon Fund, which has about 4,000 known affected investors and damages amounting to 57.7 billion KRW. The CEO of Blue Moon Fund, Mr. Kim, disappeared overseas after closing the business at the end of July, and investors have formed an emergency response committee to prepare for a class-action lawsuit.

Also, in the same month, the CEO of Nexrich Funding (NexFun) was arrested on charges including fraud and violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission. NexFun caused damages of approximately 25.1 billion KRW by using a so-called "Ponzi scheme," where funds collected from new investors were used to pay principal and interest to previous investors. About 2,000 victims are pursuing lawsuits to recover their losses.