South Korean crypto lending firm Delio finds itself in a challenging situation as its assets have been seized by a local financial regulator, raising concerns about its ability to continue providing normal services to clients. The firm’s ongoing legal battle with depositors and a recent search and seizure of assets by the Financial Services Commission (FSC) have further complicated the situation.
In a blog post translated from Korean, Delio revealed that all assets owned by customers and the company, including cold wallets and ledgers, were seized by the FSC on July 18. This action has made it difficult for the firm to offer regular services, and there is also a need to protect the interests of depositors and prevent the scattering of Delio’s property.
As a consequence of these events, Delio has suspended interest payments for its deposit and vault users from July 24. Additionally, services that require extra expenses, such as interest payments and operational expenses, have also been suspended.
The troubles for Delio began earlier when it suddenly halted withdrawals and deposits on its platform on June 14. The reason behind this move was to safeguard customer assets from market volatility following the suspension of deposits and withdrawals at sister lending company Haru Invest. The situation at Haru Invest was triggered by the discovery of false information provided by its consignment operator, B&S Holdings.
Although Delio announced that withdrawals would be resumed on June 17, it did not provide a specific timeline for full platform functionality restoration. While some of its staking services were reopened for withdrawals on June 27, the FSC continued its investigation into the company based on the abrupt suspension of withdrawals.
The FSC eventually sued Delio for fraud, embezzlement, and breach of trust related to the unilateral decision to suspend user deposits and withdrawals on June 14. This legal action resulted in a ban on CEO Jeong Sang-ho and others from leaving the country.
Delio, founded in 2018, is one of South Korea’s largest crypto lending platforms, offering custody, lending, and staking services. The firm holds substantial amounts of Bitcoin, Ether, and altcoins, which add up to a significant value.
The future of Delio remains uncertain as the legal battle with the FSC continues. The firm’s ability to resume normal services and regain the trust of its clients will heavily depend on the outcome of the ongoing legal proceedings and the measures taken to address the regulatory concerns.