According to reports, South Korean Bitcoin lender Delio is preparing an administrative lawsuit against regulators for incorrectly interpreting the law, which resulted in an investigation and hefty sanctions against the cryptocurrency lender.
Accusations of fraud and misappropriation by the Financial Service Committee (FSC) have been refuted by Bitcoin lender Delio, according to a report in a local newspaper. When there were no explicit regulations for virtual asset deposit and management products, the crypto lender asserted that the regulator improperly implied the law.
The report disclosed that the Financial Intelligence Unit (FIU) recommended the dismissal of Delio’s CEO, Jeong Sang-ho, via an announcement of sanctions on September 1.
According to Delio, this clearly indicated that the financial authorities were pressuring the company to shut down rather than giving it an opportunity to recover. Additionally, the FIU imposed a three-month business suspension and a $1.34 million (1.83 billion won) sanction on Delio.
Additionally, the company warned that the assets seized by regulators could place its operations at risk.
The CEO of Delio, Jeong Sang-ho, stated that these FIU sanctions leave a great deal of opportunity for unreasonable legal interpretation and arbitrary application and that such conduct by financial authorities could be fatal to the domestic virtual asset industry.
The most contentious issue relates to the interpretation of existing laws, specifically whether a lending company that lends cash using virtual assets as collateral is considered a virtual asset business operator and whether imposing a lock-up constitutes ‘ storage’ of virtual assets under the Special Financial Services Act.
Delio argued that whether the current law classifies virtual asset deposits and management products as financial products is ambiguous. One of the firm’s attorneys noted that any laws or regulations about virtual assets do not govern the virtual asset management business.
The attorney stated that the FIU arbitrarily interpreted virtual asset deposits and management products as financial investment products and approved them, an example of erroneous legal interpretation.
