South Korean cryptocurrency lending firm, Delio, has found itself in a precarious situation as its assets were seized by a local financial regulator. In a blog post published on July 22 and translated from Korean, Delio expressed concerns over its ability to continue providing normal services to its clients due to an ongoing legal battle with depositors and the recent seizure of its assets by the Financial Services Commission (FSC).
The seizure, which occurred on July 18, included “all assets owned by customers and the company, as well as other cold wallets and ledgers.” This development has significantly disrupted Delio’s operations, making it difficult for the firm to offer its usual services. Furthermore, the company emphasized the need to protect its property in the interest of its depositors.
As a result of these challenges, Delio took the decision to suspend interest payments for both its deposit and vault users, effective from July 24. Additionally, services that required additional expenses, such as interest payments and operational costs, were also suspended.
Delio struggles
This latest ordeal is not the first setback for Delio. In June, the firm abruptly halted withdrawals and deposits on its platform in response to the market volatility caused by the suspension of deposits and withdrawals at its sister lending company, Haru Invest. The latter had halted withdrawals on June 13 after discovering that certain information provided by its consignment operator, B&S Holdings, was false. Subsequently, Haru Invest initiated legal proceedings against B&S Holdings.
While Delio had initially announced its intention to resume withdrawals on June 17, it failed to provide a specific timeline for the full restoration of platform functionality. The FSC, despite the resumption of withdrawals for some staking services on June 27, continued its investigation into Delio’s actions. The regulatory body then filed a lawsuit against the firm for fraud, embezzlement, and breach of trust related to its “unilateral decision” to suspend user deposits and withdrawals on June 14. Furthermore, Delio’s CEO, Jeong Sang-ho, and others were barred from leaving the country.
Established in 2018, Delio is a prominent player in South Korea’s crypto lending sector, offering custody, lending, and staking services. The firm boasts significant holdings, with approximately $1 billion worth of Bitcoin, $200 million worth of Ether, and around $8.1 billion in altcoins.
The future of Delio remains uncertain as it grapples with the fallout from the FSC’s actions and the impact on its services. The legal battle and asset seizure have undoubtedly posed significant challenges for the company, leaving both Delio and its clients in a state of uncertainty.
