[At a Crossroads] Alois ① Illegal Hacking Product Exposure 'International Embarrassment'... Concerns Over Performance Impact

Set-Top Boxes with 'DDoS Attack' Function Exported to Europe
Illegal Profits of 6.1 Billion Won Seized... Performance and Financial Impact Inevitable

Screenshot of Alois homepage.

KOSDAQ-listed company Alois has been caught selling set-top boxes embedded with illegal hacking programs directly to the European region. Since Alois's main sales market is Europe, where illegal activities are strictly regulated, this is expected to have a negative impact on future sales.

According to the financial investment industry on the 10th, the police sent five people, including Alois's CEO and executives, to the prosecution without detention on charges of violating the Information and Communications Network Act at the end of last month.

According to the police, Alois supplied about 240,000 set-top boxes equipped with distributed denial-of-service (DDoS) attack programs to European illegal online video service (OTT) broadcaster Company A for approximately 5 years and 8 months from January 2019 to last September.

Company A is known as a provider of illegal streaming services like Nunutivi, offering some OTTs such as Netflix and European professional soccer broadcasts to set-top box users without paying copyright fees. It was investigated that Company A requested its partner Alois to embed a DDoS program capable of counterattacking competitors' DDoS attacks.

Accordingly, Alois directly embedded the DDoS program into its products from March 2019 to November 2021, and otherwise distributed malicious programs in the form of 'firmware updates.' Company A reportedly aimed to poach competitors' customers through this.

Alois reportedly earned about 6.1 billion KRW in profits from these criminal activities. Accordingly, the prosecution has provisionally seized bonds worth 6.1 billion KRW held by Alois under the Act on the Regulation and Punishment of Criminal Proceeds Concealment.

This incident is expected to cause Alois to suffer performance and financial damage. Alois is a company that manufactures Android OTT set-top boxes called FORMULER. Most of its sales occur overseas, with the largest shares by region being 68% in the European Union (EU) and 27% in North America.

In Europe, where Alois's sales are highest, governments have recently taken measures to prevent illegal content usage. For example, the UK has established the Intellectual Property Crime Unit (PIPCU) to take action against those who promote copyright infringement by selling illegal IPTV equipment. It is known that large-scale crackdowns were also conducted last year.

In particular, since this case was discovered when INTERPOL was investigating Company A located in Europe and found links to Alois, requesting the Korean police to investigate, there is a possibility that European authorities may also take measures against Alois products in the future.

Additionally, the 6.1 billion KRW in assets seized as criminal proceeds corresponds to 15.06% of Alois's equity capital of 40.7 billion KRW. This amount is comparable to Alois's cash equivalents of 6.2 billion KRW. Furthermore, Alois's cumulative net profit for the third quarter of this year is 1.9 billion KRW, but if a litigation provision of 6.1 billion KRW is reflected, it could turn into a large-scale deficit.

Meanwhile, multiple inquiries were made to Alois regarding this matter, but no response was received.