South Korean crypto lending firm, Delio, is currently facing an investigation by the country’s Financial Services Commission (FSC) for alleged fraud, embezzlement, and breach of trust. The investigation was initiated after Delio unilaterally decided to suspend users’ deposits and withdrawals on June 14, prompting concerns from investors.
According to a report by local news outlet Digital Asset, Delio’s CEO and management staff have been barred from leaving the country pending the investigation by prosecutors. The company’s decision to halt transactions came shortly after its sister firm, Haru Invest, suspended withdrawals and deposits due to issues with a “consignment operator.” Delio’s management had allegedly denied any exposure to Haru Invest before the suspension, raising suspicions about their involvement.
Delio, one of South Korea’s leading crypto lenders, holds significant amounts of Bitcoin ($1 billion), Ether ($200 million), and various altcoins ($8.1 billion). The company has stated that it will secure additional capital to compensate affected users but has not provided a fixed schedule for resuming withdrawals.
As a registered virtual asset provider (VASP), Delio falls under the regulation of the country’s Financial Intelligence Unit. However, Haru Invest, reportedly not a VASP, operates outside regulators’ jurisdiction. Haru Invest has taken legal action against its service partner in response to the issues it faced.
The investigation into Delio underscores growing concerns surrounding the cryptocurrency industry’s lack of oversight and potential risks for investors. Regulators are keen on ensuring the integrity of the market while protecting users from fraudulent activities.
This incident highlights the need for stricter regulations and transparency within the crypto lending sector to safeguard investors’ funds. It also serves as a reminder for individuals to exercise caution when engaging with crypto platforms and thoroughly research their credibility before making any transactions.
While the investigation is ongoing, it is crucial for the authorities to conduct a thorough examination of Delio’s activities and hold accountable those responsible for any wrongdoing. This case may serve as an important precedent for future regulatory actions in South Korea’s evolving crypto landscape.