Melon will actively be cooperating regarding the investigation of their company.

Previously, Korea’s largest music site Melon came under the suspicion of embezzling royalties from copyright holders in the past when they were a subsidiary of SK Telecom.

On June 14, a source from Kakao stated, “This is related to the case in which Loen Entertainment, while under SKT as a subsidiary from 2009 to 2011, created a ghost music label to embezzle billions of won (approximately millions of U.S. dollars) in royalties. We are considering the matter very stringently. We will actively cooperate with the prosecution’s investigation, and in order to conduct a proper fact-finding investigation, we are taking appropriate measures.”

Last month, the cyber investigation division of the Seoul Eastern District Public Prosecutors’ Office conducted a search and seizure at Melon’s office. Melon is currently suspected of creating the ghost label LS Music and receiving a portion of royalties. They are also under the suspicion of deciding on the embezzlement amount through simulations.

Regarding the claims, a source from Kakao responded that this occurred before Kakao’s acquisition of Melon and that they would prioritize compensating the copyright holders following the results of the investigation. The Kakao source stated, “Regarding the loss taken on by the copyright holders, we plan to start actively compensating as soon as the facts are checked.”

They added, “We’ll only know after the results of the fact-finding [investigation] come out, but if this is true, Kakao has also definitely suffered damage. We will exercise the right to indemnity against Affinity Equity Partners and SK Telecom.”

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