Delio’s Bankruptcy Declaration
On November 22, a Seoul court officially declared Delio, a South Korean platform for virtual asset deposits, bankrupt, according to multiple local media sources.The company has found itself in dire financial straits, with debts reaching approximately 245 billion won, which is around $1.75 billion owed to its customers.
Delio had already suspended withdrawals last year, signaling serious trouble within the organization. As the liquidation process begins, customers affected by these developments will have the opportunity to submit their claims until February 21, 2025.
The first creditors’ meeting is slated for March 19, 2025.
A court official highlighted that Delio had relied on a third-party entity for managing customer deposits, and controversially, a significant portion of these funds was tied up in an account with FTX.
The aftermath of FTX’s collapse in November 2022 left Delio unable to retrieve these assets, complicating further efforts to return funds to customers following a suspension on June 13, 2023.
This situation has deeply impacted around 2,800 of its users.
Legal Challenges and Regulatory Issues
In an effort to challenge regulatory actions against it, Delio filed a countersuit against South Korean authorities in September 2023.This legal move came in response to accusations of misinterpretation of laws.
The controversy escalated when the Financial Intelligence Unit (FIU) recommended the removal of Delio’s CEO, Jeong Sang-ho, on September 1, 2023.
During this tumultuous period, Delio was also fined 1.83 billion Korean won (approximately $1.34 million) and temporarily had its business license suspended. Founded in 2018, Delio made history as the first South Korean cryptocurrency business to secure virtual asset service provider (VASP) approval from the FIU in 2022.
However, by June 2023, the company proposed a plan to create a separate entity aimed at managing its debts while exploring potential acquisitions from interested parties looking to gain VASP status.
Currently, Jeong Sang-ho faces serious legal repercussions, including charges of fraud, embezzlement, and breach of trust, and he’s in the midst of a trial.
During court proceedings in June, he argued that customer deposits were never guaranteed as “principal protected.”
Impact on Related Companies
Coinciding with Delio’s operational halt, Haru Invest, a sister company, also ceased its activities.Following these events, Haru Invest accused B&S Holdings of providing misleading management updates and filed a lawsuit on June 14, 2023.
This led to Haru Invest being declared bankrupt on November 20. An extraordinary incident occurred during the bankruptcy proceedings in August, when Haru Invest CEO Hugo Hyungsoo Lee was attacked by an annoyed customer.
Earlier that February, Lee had been detained along with two other executives, reflecting the growing tensions surrounding these financial troubles. “`html
Source: Cointelegraph.com
“`
