Delio, one of the largest cryptocurrency lending companies in South Korea, halted interest payments to users on Monday and warned its continued operations are in doubt after prosecutors raided the company last week following the filing of a fraud lawsuit by Delio clients.
See related article: South Korea mandates new accounting rules for domestic crypto sector
Fast facts
- Seoul Southern District prosecutors conducted a search and seizure of Delio on July 18, the company confirmed in a blog post dated July 22. It said all assets belonging to the company and customers have been seized, along with cold wallets and ledgers, resulting in difficulties to conduct business as usual.
- The Seoul Southern District Prosecutor’s Office declined to share details of the matter with Forkast.
- On June 14, Delio ceased withdrawals and deposits on the platform, citing increased market volatility caused by the suspension of withdrawals and deposits earlier that day by Haru Invest, a Singapore-based crypto investment manager that Delio reportedly worked with.
- According to South Korean news agency Newsis, Delio withdrew 9.24 billion won (US$7.2 million) worth of its crypto holdings seven hours before suspending user withdrawals, to three anonymous external wallets that were not disclosed by the company nor the executives.
- About 100 customers, represented by law firm LKB & Partners, on June 16 filed a fraud complaint to the Seoul Southern District Prosecutor’s Office against the executives of Haru and Delio, according to Newsis.
- The plaintiffs allege the two companies promised risk-free high returns to depositors while investing customer funds in risky futures, options and other trades without disclosure. The combined damages the plaintiffs claim amounts to about 50 billion Korean won (US$39 million).
- Delio is a crypto lending firm that is licensed by South Korean financial authorities. It previously signed a memorandum of understanding with several local conglomerates including the SK and Lotte Group, according to its website.
- Forkast has requested comment from Delio.
See related article: South Korea, Singapore, Thailand clarify crypto rules as U.S. in state of regulatory ‘warfare’