Crypto Lending Platform Delio Declared Bankrupt, Owes $1.75B 

Highlights:

• On Nov. 22, the court declared Delio bankrupt after operational disruption.
• Delio must sell assets; creditors must submit claims by February 21, 2025.
• Delio’s sister company, Haru Invest, also declared bankruptcy.

On Nov. 22, a Seoul court declared South Korean crypto lending platform Delio bankrupt following a significant operational disruption and financial losses. Delio withdrawals in mid-2023, leaving 2,800 users unable to access 245 billion won ($1.75 billion) in cryptocurrency. This decision has since led to the initiation of liquidation proceedings.

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As part of the bankruptcy process, Delio must sell its assets. The proceeds will be shared with creditors, who must submit claims by February 21, 2025. Moreover, a creditors’ meeting is scheduled for March 19, 2025. Discussions will focus on the company’s potential future direction.

Crypto lender Delio declared bankrupt in South Korea after halting $175M in withdrawals

Delio, a South Korean cryptocurrency lending platform, has been declared bankrupt by a Seoul court following its sudden halt of user withdrawals totaling roughly 245 billion won ($175…

— CoinNess Global (@CoinnessGL) November 22, 2024

The majority of Delio’s customer deposits were managed through an FTX account. This became a major issue after FTX’s collapse in November 2022, preventing asset recovery. As a result, Delio has been unable to process customer withdrawal requests since June 13, 2023.

A court official reportedly stated:

“The debtor leased and entrusted the management of customer-deposit virtual assets to the management company, but a large part of it was deposited and managed in the FTX account.”

Delio’s Legal Struggles and Regulatory Challenges

Delio has been entangled in multiple legal battles. In September 2023, it countersued South Korean regulators, alleging misinterpretation of laws. This came after the Financial Intelligence Unit (FIU) fined the company 1.83 billion won ($1.34 million) and recommended dismissing CEO Jung Sang-ho. Delio’s business license was also temporarily suspended.

During the second hearing of the first criminal trial on June 25 at the Seoul Southern District Court, Jung stated,” I never promised a guarantee of principal. It was clearly stated in the terms and conditions, and FIU [Korea Financial Intelligence Unit] required us to notify investors of this through our website.” 

Established in 2018, Delio became South Korea’s first crypto firm to secure Virtual Asset Service Provider (VASP) status from the Financial Intelligence Unit in 2022. Earlier this year, it suggested forming a new entity to manage its debts and attract buyers interested in VASP credentials.

Delio’s Sister Company Faces Fraud and Bankruptcy Turmoil

Delio’s sister company, Haru Invest, stopped operations on the same day as Delio and was declared bankrupt on November 20, 2024. The report revealed that Haru Management Limited, responsible for overseeing the crypto yield firm, disappeared with funds belonging to over 10,000 customers. The sudden suspension of withdrawals left users unable to access 1.4 trillion won ($1,002,197,840) in investment yields. Prosecutors further alleged that the executives falsely promoted Haru as a stable business using “risk-free diversified investment techniques.

JUST IN: 🇰🇷 South Korean crypto yield platform Haru Invest, involved in a $1B fraud case, has been declared bankrupt. 📉 #HaruInvest

— Breaking Whale (@BreakingWhale) November 20, 2024

In August, during bankruptcy proceedings, Haru Invest’s CEO, Hugo Hyungsoo Lee, was attacked by an angry customer. The customer, a man in his 40s, stabbed Lee multiple times in the neck before security stopped him. This customer was one of the 16,000 victims of Haru Invest’s bankruptcy. Local authorities launched an investigation into Haru and Delio after both companies suddenly stopped withdrawals.

Moreover, authorities arrested Lee and two other executives on fraud and embezzlement charges earlier this year. Prosecutors claim they embezzled $826 million from users between March 2020 and June 2023.

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