$53.4 million (60 billion KRW) lawsuit has occurred between a venture alliance called Yello Mobile and a cryptocurrency exchange called Coinone. It is an unusual legal conflict that has occurred between a subsidiary and a parent company.
Conflict that has become an issue after Yello Mobile acquire DAYLI Financial Group has come to surface due to this lawsuit. It is likely that Yello Mobile’s attempt to grow its size by acquiring best FinTech startups will end up being a failure.
According to relevant industries, Coinone filed a lawsuit that asks Yellow Mobile to return $24 million (27 billion KRW) loan back to Coinone.
“Because Yello Mobile has yet to pay back its loan, we are currently taking legal procedures.” said a representative for Coinone. “If Yello Mobile still does not pay back the loan after a lawsuit, it is possible that its tangible and intangible assets will be seized.”
DS Asset and Alpenroute Asset Management also filed lawsuits against Yello Mobile in May regarding stock trading payment. Amount of their lawsuits are $9.25 million (10.4 billion KRW) and $15 million (16.9 billion KRW) respectively. Amount of lawsuits filed by DS Asset and Alpenroute Asset Management, which have friendly relationship with Coinone, as well as Coinone is worth $54.1 million (60.8 billion KRW).
“Because Coinone’s lawsuit can be seen as formality as there can be problems such as malpractice if it does not take legal procedures.” said a representative for Yello Mobile. “We are going to pay back Coinone by selling our assets and through other ways.”
Loan and stock trading payment that were borrowed was used by Yello Mobile to purchase shares of IGis System, which is a company listed on KOSDAQ. “Yello Mobile practically borrowed $17.8 million (20 billion KRW) forcibly to purchase companies irrelevant to blockchain.” said a representative for DAYLI Financial Group. “When Yello Mobile has become our biggest shareholder, it has used Coinone as its source of funding.”
“Coinone’s lawsuit can be seen as formal procedure because it can be seen as malpractice if it does not take legal procedures.” said Yello Mobile. “It is difficult for us to talk details since this is an issue involving lawsuits.”

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<Current status of lawsuits between Yello Mobile and Coinone>

Yello Mobile purchased shares of LH, which is the biggest shareholder of IGis System, in February and changed its company name to DAYLI Blockchain. Afterwards, it set up its subsidiary called DAYLI Crypto IB and purchased 10.23% of shares of DAYLI Intelligence where there are many blockchain-based FinTech companies.
DAYLI Financial Group is seeing that a lawsuit by Coinone will display conflicts between Yello Mobile and DAYLI Financial Group that have continued since last year. Actually, when Yello Mobile suddenly became DAYLI Financial Group’s biggest shareholder in last September, major founders and executives and employees of DAYLI Financial Group left the company.
DAYLI Financial Group’s failure to acquire FOK (Fund Online Korea) was the final blow. At that time, its attempt to acquire FOK became foundered after it failed to pass financial authorities’ evaluation on its eligibility as FOK’s biggest shareholder. Chronic problems such as disclaimer of opinion by an accounting firm towards Yello Mobile were the main reasons why DAYLI Financial Group could not acquire FOK.
Yello Mobile’s attempt to expand its business towards FinTech through M&A started to spiral down when its attempt to acquire a financial company became foundered. It is heard that these lawsuits are also occurring as institutional investors such as VC (Venture Capital) opposed Yello Mobile acquiring DAYLI Financial Group.
“Concerns towards Yello Mobile are becoming real.” said a representative for a venture investment company. “Changes in shares that are occurring within DAYLI Financial Group are ultimately bearing separation between DAYLI Financial Group and Yello Mobile in mind.”
“We do not want conflicts between Yello Mobile and us to create more problems.” said a representative for DAYLI Financial Group. “By resolving problems regarding our biggest shareholder, we will be able to show our presence within FinTech industry and financial industries.” Yello Mobile did not make official statements regarding equity relationship between itself and DAYLI Financial Group.
Staff Reporter Ryu, Geunil | ryuryu@etnews.com & Staff Reporter Gil, Jaeshik | osolgil@etnews.com