South Korea’s major crypto lender Delio warns its operations in peril amid lawsuit

South Korean major crypto lender Delio’s operations in peril

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Delio, one of the largest cryptocurrency lending companies in South Korea, halted interest payments for all users on Monday, after announcing difficulties in providing services as usual. The move comes after local prosecutors raided the company last week after abruptly halting withdrawals in June.

See related article: South Korea mandates new accounting rules for domestic crypto sector

Fast facts

  • Seoul Southern District prosecutors conducted a search and seizure of Delio on July 18, the company confirmed in a blog post dated July 22. It said all assets belonging to the company and customers have been seized, along with cold wallets and ledgers, resulting in difficulties to conduct business as usual.
  • The Seoul Southern District Prosecutor’s Office declined to share details of the matter with Forkast.
  • On June 14, Delio ceased withdrawals and deposits on the platform, citing increased market volatility caused by the suspension of withdrawals and deposits earlier that day in Haru Invest, a Singapore-based crypto investment manager that Delio reportedly worked with. 
  • According to South Korean news agency Newsis, Delio withdrew 9.24 billion won (US$7.2 million) worth of its crypto holdings seven hours before suspending user withdrawals, to three anonymous external wallets that were not disclosed by the company nor the executives.
  • About 100 investors, represented by law firm LKB & Partners, filed a complaint on June 16 against the executives of Haru and Delio with fraud charges to the Seoul Southern District Prosecutor’s Office, according to Newsis
  • Plaintiffs reportedly allege that the two companies promised risk-free high returns to depositors while entrusting customer assets with risky futures, options and other trades without proper disclosure. The combined damages of the plaintiffs amount to about 50 billion Korean won (US$39 million). 
  • Delio is a crypto lending firm that is licensed by South Korean financial authorities. It previously signed a memorandum of understanding with several local conglomerates including the SK and Lotte Group, according to its website.
  • Forkast has requested comment from Delio.

See related article: South Korea, Singapore, Thailand clarify crypto rules as U.S. in state of regulatory ‘warfare’

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