This article was published on June 2, 2025, at 4:24 p.m. on the ChosunBiz MoneyMove site.
CrossFinance, an online investment-linked finance (P2P) company facing a liquidity crisis due to a large-scale repayment delay, is pursuing investment with the premise of selling its management rights. CrossFinance was established in 2017 as a joint venture between Korea Exchange's subsidiary Koscom and Muhak's subsidiary StarBank.
On the 2nd, according to the investment banking (IB) industry, CrossFinance is seeking external investment to resolve its liquidity crisis. It is currently in the process of selecting advisory firms targeting domestic accounting firms. The plan is to inject funds through a third-party allotment of paid-in capital increase. The new investor is designed to secure management rights by becoming the largest shareholder of CrossFinance.
The unsettled situation at CrossFinance began when a payment processing agency (PG) failed to repay the sales proceeds in mid-last year. The problematic product is a card sales advance product. It is structured to invest in the receivables of self-employed individuals and small businesses through factoring companies (advance payment companies). When the PG, Lumen Payments, settles the sales proceeds with the advance payment company, the advance payment company pays the corresponding amount to investors in the ONT industry.
Specifically, when card sales occur at small business franchise stores, the card company pays the sales proceeds after a certain period. Small business owners in need of cash will transfer their sales receivables to the advance payment company at a discounted price. Here, P2P investors lend money so that the advance payment company can purchase the small business' card sales receivables at a discounted price. The PG ultimately transfers the money it should pay to the small business to the P2P, allowing the investors' money to be recouped.
However, a repayment delay situation occurred when Lumen Payments delayed the repayment of some card proceeds. Subsequently, on the first week of August last year, CrossFinance reported Lumen Payments and CEO Kim In-hwan to financial authorities and investigative agencies. During the prosecution investigation, it was revealed that Lumen Payments set up paper companies to create false receivables and received loans against these as a method to embezzle funds. The amount they embezzled from CrossFinance is known to be around 72 billion won.
As of April this year, CrossFinance's cumulative linked loan size is 5.5798 trillion won, and its loan balance is at 79.6 billion won. Due to last year's unsettled situation, operational revenue is recorded at 2.4 billion won and net loss at 996.79 million won. Total assets amount to 560 million won, and total liabilities are at 7.6 billion won. Including costs owed to investors due to the repayment delays, the final liabilities are expected to increase to hundreds of billions won.
The industry is questioning the possibility of external funding sources as the ONT industry situation deteriorates due to the economic recession. This is because about half of the companies under the ONT Association have not been able to pay their membership fees properly due to poor business conditions. In particular, CrossFinance is considered to have low chances of recovery as most of its linked loan products are concentrated on bills and receivables, and trust has diminished due to the repayment delays.
The continuous emergence of bad debts until recently is also a problem. According to CrossFinance's disclosure of bad debt occurrences last April, states such as future loans, card sales advance, logistic loans, and seller loans have been in arrears for over three months. Bad debts refer to receivables that are expected to be practically uncollectible.
As innovation financial service designation has made institutional investment possible, there are predictions that strategic investors (SI) such as savings banks may participate. A consortium is expected to form with restructuring funds that inject capital into distressed corporations through workout and corporate rehabilitation procedures.
An IB industry official noted, 'In addition to the unsettled amount of 70 billion won, bad debts are also occurring in other loans, increasing the amount that must be injected into the company,' adding that 'although the chances are low, if it goes ahead, collaboration with firms that hold restructuring blind funds may be necessary.'
CrossFinance is a company established in 2017 by Koscom, a subsidiary of the Korea Exchange, and Muhak's subsidiary StarBank. It started as Korea's first bill brokerage and officially registered as an ONT firm with the Financial Services Commission in 2021, changing its name to CrossFinance Korea.
Currently, the shareholders of CrossFinance are Koscom and Inzi Group, a manufacturer of automotive, semiconductor, and electronic components. Inzi Group holds 40.40% equity (with CYMECHS at 29.92%, INZI DISPLAY at 5.24%, and YUTECH SOLUTION at 5.24%), while Koscom holds 33.52%. Inzi Group acquired the CrossFinance shares previously held by StarBank at the end of 2019.