(Yonhap)

Prosecutors said Thursday they indicted the two founders of Mergepoint, a once-popular online discount app, for causing some 100 billion won ($83.63 million) worth of damages to customers and member stores by selling virtual coupons that could not be used.

The Seoul Southern Prosecutors Office said the sibling founders -- Kwon Nam-hee, CEO of the app operator, Mergeplus, and Kwon Bo-goon, the top strategy executive, -- were charged with fraud and violating the e-transaction law. The latter Kwon was also charged with breach of trust. They were arrested last month.

They stand accused of selling 252.1 billion won worth of "Mergemoney" to some 570,000 people from May 2020 to August last year, knowing that their business was going under with mounting losses.

They are also suspected of operating the online discount service without registering the business with the Financial Service Commission during the first half of last year, as well as offering an online payment service for VIP customers without a regulatory license.

Prosecutors believe the younger Kwon also misappropriated about 6.7 billion won of company funds to use it for personal spending.

Prosecutors launched the investigation in August after consumers filed complaints over Mergepoint's abrupt announcement to significantly reduce its reward service.

Mergepoint gained huge popularity in South Korea for the discount service in which consumers could buy items or eat out with the Mergepoints at a 20 percent discount off the regular price and use them in about 60,000 places nationwide, like retail chains, convenience stores and coffee shops.

The announcement prompted tens of thousands of users to seek refunds for the points. The total amount of financial damages is estimated at 100 billion won, according to the prosecution. (Yonhap)