Regulators Probe South Korean Crypto Lending Firm Delio

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Key takeaways:

  • The cryptocurrency lending firm Delio is the subject of a probe by South Korean authorities.
  • The company’s CEO and executive team have been forbidden from leaving the country.

According to an article published by Digital Asset, the South Korean Financial Services Commission (FSC) has, as of June 30, opened an investigation into the crypto lending company Delio. Delio’s unilateral decision to halt user deposits and withdrawals on June 14 is the subject of accusations from the FSC of fraud, embezzlement, and breach of trust. 

Delio CEO Jung Sang-ho stated that the company would resume withdrawals on June 17 during an unusual investors’ meeting, though he did not provide a specific timeline at the time. The organization started allowing withdrawals for some of its staking services on June 27.

To make up for this, Delio will try to raise as much money as it can, according to Sang-ho. With a current holding of $8.1 billion in various altcoins and an estimated $1 billion in Bitcoin, Ether, and other cryptocurrencies, Delio is one of South Korea’s biggest cryptocurrency lenders. According to reports, the company’s CEO and executive team have been prohibited from leaving the country while prosecutors conduct an investigation.

The sister company of Delio, Haru Invest, stopped accepting deposits and withdrawals on June 13 due to a problem with a “consignment operator.” Due to counterparty risk, Delio followed suit the next day as a result of the action. According to reports, Haru Invest has reduced the majority of its workforce since the announcement. The firm claims that it is currently suing its service provider.

Delio is subject to government oversight as a recognized virtual asset supplier (VASP) by the nation’s Financial Intelligence Unit. However, according to reports, Haru Invest is not a VASP and is not governed by regulators. The management of Delio allegedly denied exposure to Haru Invest just before making the decision to halt withdrawals.

The Act governing the protection of users of virtual assets was enacted yesterday by South Korea’s National Assembly. The South Korean government is acting to protect cryptocurrency investors from implosions like Do Kwon’s Terra ecosystem by passing a new cryptocurrency law. Virtual assets are digital tokens with monetary value that may be traded or transferred. Central Bank Digital Currency is not included in the definition of virtual assets.

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