On November 22, a court in Seoul declared Delio platform, a South Korean virtual asset deposit platform, insolvent, according to numerous local press reports.
Last year, Delio suspended withdrawals due to its outstanding debt of 245 billion won ($1.75 billion) to its customers.
Delio says there is possibility of resolving customer issues
The platform will initiate liquidation proceedings. The initial creditors’ meeting will be conducted on March 19, 2025, and customers can submit claims until February 21, 2025. According to reports, a court official stated:
“The debtor leased and entrusted the management of customer-deposit virtual assets to the management company, but a large part of it was deposited and managed in the FTX account.”
Subsequently, Delio platform needed to recover its assets following the bankruptcy of FTX in November 2022 and return consumer assets after June 13, 2023. The bankruptcy has impacted approximately 2,800 customers.
A multitude of legal proceedings
In September 2023, the platform filed a countersuit against the South Korean government for misinterpreting the law. This action was taken in response to the Financial Intelligence Unit’s recommendation to terminate the CEO Jeong Sang-ho on September 1, 2023. The platform’s business license was provisionally suspended and fined 1.83 billion Korean won ($1.34 million).
Delio, established in 2018, was the first Korean crypto firm to obtain virtual asset service provider (VASP) status from the FIU in 2022. In June of this year, Delio suggested establishing a new company, transferring its debt to it, and selling the company to a bidder seeking VASP status.
Jeong Sang-ho is currently facing charges of fraud, embezzlement, and breach of trust. In June, he contended in court that the platform did not provide “principal protection” for customers’ deposits.
Haru Invest, Delio’s sister corporation, ceased operations concurrently with Delio. It filed a lawsuit against B&S Holdings, a consignment operator, on June 14, 2023, for furnishing it with fraudulent management reports. On November 20, Haru Invest was declared insolvent.
In August, Haru Invest CEO Hugo Hyungsoo Lee was wounded in the neck by an enraged customer during bankruptcy proceedings. In February, Lee and two other executives were apprehended.