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Regulatory Troubles for Delio
Delio, a noteworthy crypto lending firm based in South Korea, has recently raised concerns about its ability to render services to its clients smoothly. This follows an asset seizure by the country's financial oversight agency.
Delio's Official Statement
In a blog post published on July 22 and translated from Korean, Delio outlined that a continuing legal fight with depositors, coupled with a search and seizure operation on July 18 that led to their assets being confiscated, has complicated the company’s operations. The South Korean Financial Services Commission seized all assets belonging to both the company and its customers, including cold wallets and ledgers.
The firm further clarified that the incident has thrown a wrench in its plans to provide services normally and has necessitated safeguarding Delio's property to protect the depositors' interests.
Suspension of Interest Payments
As of July 24, Delio has paused interest payments to its depositing and vault clientele, as detailed in the post. The firm went on to mention that expenditure-incurring services, such as interest repayments or operating cost-related services, have also been put on hold temporarily.
Actions Taken Since June
On June 14, Delio unexpectedly ceased withdrawals and deposits on its platform, aiming to shield the assets of its currently held customers from the market tumult resulting from halted transactions at its sister lending establishment, Haru Invest.
Haru Invest, on the other hand, had put a hold on withdrawals on June 13 following an investigation that discovered some misinformation shared by its consignment operator B&S Holdings. Haru Invest followed up with a legal charge against B&S holdings the very next day.
A few days later, Jung Sang-ho, CEO of Delio, stated that withdrawals would be resumed, albeit without a specific timeline for complete recovery being offered. On June 27, Delio resumed withdrawal operations for a few of its staking services.
Investigation and Lawsuit
But these actions didn't deter the FSC from initiating an investigation and subsequent lawsuit against Delio, specifically over the sudden suspension of withdrawals. A June 30 report from Digital Asset also highlighted this.
For alleged fraud, embezzlement, and breach of trust relating to the sole decision to halt user transactions on June 14, the FSC sued Delio. In addition, its CEO Jung Sang-ho and others have been prohibited from leaving the country.
About Delio
Established in 2018, Delio is a leading crypto lending platform in South Korea, offering a diverse range of custodial, lending, and staking services. The firm’s online portal reveals it holds roughly $1 billion in Bitcoin (BTC), $200 million in Ether (ETH) and about $8.1 billion in altcoins.
