South Korean cryptocurrency lending firm Delio is facing an investigation by the country’s Financial Services Commission (FSC), as reported by local news outlet Digital Asset.
The FSC has accused Delio of engaging in fraudulent activities, embezzlement, and breach of trust. The investigation stems from Delio’s unilateral move to halt users’ deposits and withdrawals on June 14.
In an extraordinary investors’ meeting held on June 17, Delio CEO Jung Sang-ho informed participants that the company would resume withdrawals, albeit without a fixed schedule at the time. On June 27, Delio began allowing withdrawals for a portion of its staking services, stating that they would secure sufficient capital for compensation.
Delio currently stands as one of South Korea’s leading crypto lenders, with an estimated $1 billion in Bitcoin and $8.1 billion in various altcoins. As the investigation proceeds, the CEO and management staff of Delio have reportedly been prohibited from leaving the country pending a further inquiry by prosecutors.
The incident began on June 13 when Delio’s sister firm, Haru Invest, suspended both withdrawals and deposits, citing issues with a “consignment operator.” Consequently, Delio followed suit the next day, presumably due to counterparty exposure concerns. Following the announcement, Haru Invest allegedly terminated the majority of its workforce and initiated legal action against its service partner.
While Delio operates as a registered virtual asset provider (VASP) under the supervision of the Financial Intelligence Unit, Haru Invest reportedly falls outside the jurisdiction of regulators since it is not recognized as a VASP. Interestingly, there are allegations that Delio’s management denied any involvement with Haru Invest shortly before deciding to suspend withdrawals.