Delio platform warns of potential closure after asset seizure

Delio, a South Korea-based crypto-lending platform, reported difficulties returning to normal operations after assets were seized by the FSC.

According to a blog post, as part of civil proceedings with depositors, the regulator seized ‘all assets belonging to clients and the company, as well as other cold wallets and accounting books’.

Delio expressed concern about the possibility of resuming services in their previous form.

On June 14, the company temporarily restricted operations amid ‘market volatility triggered by problems at its Haru Invest subsidiary, a crypto-asset management firm’.

The latter suspended withdrawals and deposits, citing issues with service partners.

At the time, Delio explained its actions as an effort to safeguard client assets. Representatives promised that withdrawal moratorium would be lifted ‘after the current situation is resolved and its ensuing consequences’. They said they would keep investors informed of any developments.

On the same day, Haru Invest filed suit against partner B&S Holdings alleging fraud.

On June 27, Delio resumed withdrawals for clients of some staking services. Three days later, the FSC opened an investigation into the company’s activities, according to Digital Asset.

The regulator filed suit against Delio for fraud, embezzlement and breach of trust related to a ‘one-sided decision’ to suspend deposits and withdrawals by users. CEO Jeong San-ho and other individuals were barred from leaving the country.

According to the company’s website, Delio’s AUM reached $1 billion in Bitcoin and $8.1 billion in altcoins.

As of January 2024, the FSC will require firms to disclose holdings of digital assets on their balance sheets, according to updated accounting rules.

In June 2023, the South Korean Parliament passed a cryptocurrency-user protection law.

The act consolidated 19 different bills related to digital assets. It imposes penalties for offenses such as insider trading, market manipulation and unfair trading practices.