South Korean Crypto Firm Delio Faces Investigation for Alleged Fraudulent Activities

South Korean Crypto Firm Delio Faces Investigation for Alleged Fraudulent Activities

Altcoin news, News

Delio, a South Korean cryptocurrency lending firm, is currently under investigation by the country’s Financial Services Commission (FSC) for engaging in fraudulent activities, embezzlement, and breach of trust, according to a report by local news outlet Digital Asset.

The investigation stems from Delio’s decision to suddenly halt users’ deposits and withdrawals on June 14. However, during an investors’ meeting held on June 17, Delio’s CEO, Jung Sang-ho, announced that the company would resume withdrawals without providing a fixed schedule. Later on June 27, Delio started allowing withdrawals for a portion of its staking services, assuring users that they would secure enough capital for compensation.

Delio is currently one of South Korea’s leading crypto lenders, holding approximately $1 billion in Bitcoin and $8.1 billion in various altcoins. As the investigation unfolds, the CEO and management staff of Delio have been prohibited from leaving the country pending further inquiries by prosecutors.

The incident began when Delio’s sister company, Haru Invest, suspended both withdrawals and deposits on June 13, citing issues with a “consignment operator.” Consequently, Delio followed suit the next day due to concerns related to counterparty exposure. After the announcement, Haru Invest reportedly terminated most of its workforce and initiated legal action against its service partner.

While Delio operates as a registered virtual asset provider (VASP) under the supervision of the Financial Intelligence Unit, Haru Invest falls outside the jurisdiction of regulators as it is not recognized as a VASP. Interestingly, there are allegations of Delio’s management denying any involvement with Haru Invest just before deciding to suspend withdrawals.

Compiled by Coinbold

BTC, Delio