As a researcher who has followed the tumultuous world of cryptocurrencies for years now, I must admit that the news of Delio’s bankruptcy and the ensuing legal drama in South Korea feels like another chapter in this rollercoaster ride we call the blockchain industry. The saga of Delio is a stark reminder of the risks inherent in this nascent sector, where the line between opportunity and peril often seems blurred.
As a researcher, I’m sharing the information that South Korea’s virtual asset deposit platform Delio has been declared bankrupt by a court in Seoul on November 22, as reported by various local media outlets. Delio, a company with outstanding customer debts amounting to approximately 245 billion won ($1.75 billion), had previously halted withdrawals last year.
Some hope of making customers whole
Delio is set to initiate bankruptcy proceedings. Clients have until February 21, 2025, to submit their claims, and the initial creditor’s meeting has been scheduled for March 19, 2025. A court representative has stated this information based on reports.
“The debtor leased and entrusted the management of customer-deposit virtual assets to the management company, but a large part of it was deposited and managed in the FTX account.”
Due to the bankruptcy of FTX in November 2022, our platform was unable to retrieve its assets and subsequently failed to return the assets of approximately 2,800 customers as of June 13, 2023.
A welter of court actions
In September 2023, Delio filed a lawsuit against South Korean authorities for allegedly misapplying the law. The legal action followed the Financial Intelligence Unit’s (FIU) recommendation on Sept. 1, 2023, to remove Jeong Sang-ho as CEO of Delio. Simultaneously, Delio was penalized with a fine of approximately $1.34 million and faced a temporary suspension of their business license.
Established in 2018, Delio became the pioneer Korean cryptocurrency company to be granted Virtual Asset Service Provider (VASP) recognition by the FIU in 2022. Earlier this year, Delio announced plans to create a new firm, move its outstanding debts to it and eventually sell the company to an interested buyer seeking VASP status.
Jeong Sang-ho currently stands accused of fraud, embezzlement, and breach of trust. In a court hearing held in June, he contested that customer deposits on the platform were not safeguarded as “principle-guaranteed.
As a researcher, I’m sharing an update about my sister company, Haru Invest. Regrettably, both Haru Invest and Delio ceased operations on the same day. On June 14, 2023, Haru Invest took legal action against B&S Holdings, a consignment operator, alleging they provided us with misleading management reports. Unfortunately, by November 20, Haru Invest was declared bankrupt.
During a bankruptcy hearing in August, Haru Invest CEO Hugo Hyungsoo Lee was violently attacked by an upset client, resulting in a neck injury. Prior to this incident, Lee and two other executives were taken into custody back in February.
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2024-11-23 00:45