Delio, South Korean Crypto Firm, Files for Bankruptcy Amid $1.75 Billion Withdrawal Crisis
In a pivotal turn for the cryptocurrency scene in South Korea, Delio, a local crypto platform, has officially declared bankruptcy following a ruling from the Seoul Rehabilitation Court. This decision stems from ongoing challenges that have left clients unable to withdraw their virtual assets—an impressive total of about $1.75 billion. The court confirmed Delio’s financial insolvency last Friday.Bankruptcy Confirmation
Since mid-2022, Delio has barred its users from accessing their funds, putting approximately 2,800 investors in a precarious position regarding their crypto investments. Analysts describe the situation as a corporate bankruptcy, meaning the court acknowledged Delio’s inability to meet its debt obligations and allowed for its assets to be liquidated to repay creditors. This case illustrates a significant example of the bankruptcy process in action. Following the court’s decision, the process of filing claims will commence, alongside a detailed asset distribution presentation set for a creditors’ meeting. This development has brought a measure of comfort to the affected clients, as the court has required creditors to submit their claims by February 21, 2025, with the meeting scheduled for March 19, 2025.Financial Mismanagement
A representative from the Seoul Rehabilitation Court pointed out that Delio’s bankruptcy primarily resulted from its struggle to manage debts, which stemmed from the freeze on withdrawals and other operational challenges. Additionally, the extent of financial losses played a crucial role in the company’s downfall. Delio had operated as both a platform for deposits and a management service for assets, generating income and paying interest through the handling of cryptocurrencies, including Bitcoin, that customers entrusted to it. Significantly, many of the virtual assets that users deposited became unreachable after the catastrophic collapse of FTX in November 2022. This event forced Delio to halt withdrawals on its platform, exacerbating the situation.Regulatory Challenges
In a statement made in September 2023, Delio voiced its frustration with South Korean regulators, claiming that authorities had misconstrued the laws after suggesting the removal of its CEO. Consequently, the government revoked Delio’s operating license and imposed a hefty fine of $1.34 million. In response, the CEO defended the company by stating that the deposits made by investors did not come with guaranteed principal protection. Founded in 2018, Delio had the distinction of becoming the first South Korean firm to earn virtual asset service provider (VASP) status from the Financial Intelligence Unit (FIU) in 2022. “`htmlSource: Bitcoinist.com
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