Progress of Disclosure: Regarding the Arrest of a Former Employee of the Company

GungHo Online Entertainment has confirmed the arrest of a former employee on July 8, 2026, on suspicion of criminal breach of trust. This development follows a period of internal investigation into the individual, who was previously dismissed for misconduct involving the misappropriation of corporate funds through the creation of fictitious business orders. The company formally filed a criminal complaint on October 3, 2025, but withheld public disclosure until the recent arrest to avoid interfering with ongoing law enforcement activities.

The scope of this incident centers on internal financial irregularities that occurred over several years. While the specific monetary value of the misappropriated funds remains undisclosed, the company is actively collaborating with investigative authorities to determine the full extent of the financial damage. This situation highlights a significant lapse in historical oversight regarding vendor transactions and payment approval processes within the organization.

In response to these findings, the company is prioritizing the implementation of comprehensive recurrence prevention measures. These initiatives focus on strengthening internal controls, specifically targeting the ordering and payment approval workflows for external vendors. Furthermore, the organization is expanding its internal compliance education and training programs while enhancing the rigor of its internal audit and monitoring systems to mitigate future risks of similar misconduct. The company maintains a commitment to transparency as the legal proceedings continue and aims to restore stakeholder confidence through these structural improvements.