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Delio, Leading Korean Cryptocurrency Lender, Under Investigation for Fraud and Breach of Trust

South Korea's Financial Services Commission scrutinizes Delio's operations, raising concerns about user assets and company integrity.

Wed, 05 Jul 2023, 02:58 am UTC

The storm has recently been stirring up in the Korean cryptocurrency realm as the country's preeminent cryptocurrency lending giant, Delio, finds itself under scrutiny. South Korea's financial watchdog, the Financial Services Commission (FSC), has reportedly initiated an investigation into the firm's operations over suspicions of fraud, embezzlement, and breach of trust.

The firm, which boasts an impressive portfolio of approximately $1 billion in Bitcoin and $8.1 billion in various alternative cryptocurrencies, has thrown its user base into uncertainty on June 14th. On that day, Delio decided to halt all user deposits and withdrawals without any prior intimation. This unexpected decision was seemingly triggered by Delio's sister company, Haru Invest, which had suspended its own financial operations, citing "consignment operator" issues a day prior.

The CEO of Delio, Jung Sang-ho, held an extraordinary meeting on June 17th, attempting to quell the rising anxiety among stakeholders. Sang-ho promised that Delio was keen on resuming the suspended withdrawal services but stopped short of providing a definite timeline. On June 27th, Delio allowed partial withdrawals for some of its staking services, with Sang-ho assuring everyone that Delio would raise enough capital to compensate the impacted users.

While Delio is a regulated virtual asset service provider (VASP) and falls under the financial intelligence unit's oversight, Haru Invest does not share the same status. Therefore, Haru is not subjected to the same regulatory scrutiny.

Just before the suspension decision, Delio's management had reportedly denied having any exposure to Haru Invest. This denial, in the face of recent developments, raises further questions about Delio's operations and integrity. The FSC investigation is bound to shed more light on this matter.

The suspension of withdrawals and the inability of Delio's executives to leave the country amid the investigation have heightened anxiety among users and investors. The eagerly awaited resolution of this case will not only reveal the extent of Delio's culpability but also determine the fate of the users' assets.

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