After being linked to a $1 billion cryptocurrency scam, the Seoul Rehabilitation Court formally declared cryptocurrency yield platform Haru Invest bankrupt.
Haru Invest, a cryptocurrency yield company that operates under Haru Management Limited, reportedly cheated investors of 1.4 trillion won, or $1 billion, in a “rug pull” scheme that left creditors reeling, according to investigations conducted by South Korean law enforcement.
The Seoul Rehabilitation Court formally declared Haru Invest insolvent on November 20th, citing the company’s failure to reimburse consumer damages, according to local news source Newsis.
Because the majority of the company’s activities take place in Korea, the South Korean courts retain jurisdiction over it even though it was founded in the British Virgin Islands.
The court decided that February 11, 2025, would be the date of the first creditors’ meeting. Haru Management’s financial situation and the method of asset liquidation will be evaluated by the bankruptcy administrator.
At least a portion of the unpaid damages owing to investors will be covered by the liquidation process. According to the article, investors filed a court application for corporate rehabilitation processes in June 2023, but the court denied their request.
Then, in April 2024, they filed for bankruptcy. Haru Invest stated on November 15 that it was against filing for bankruptcy because it felt that doing so would restrict the company’s options and weaken its negotiating position in the ongoing attempts to recoup assets associated with FTX’s demise.
Hugo Lee, the CEO of Haru Invest, stated in the company notification that B&S Holdings, Haru’s creditor firm, possessed FTX-related assets.
According to Lee, Bang Jun-Ho, the CEO of B&S Holdings, sold $165 million worth of assets to Haru Invest executives without telling them beforehand.
Furthermore, he said that since the figure still includes assets that have already been refunded to clients, the current amount of Bitcoin that is genuinely owing to customers is not 1.4 trillion won.
Rather, he asserted that the actual amount owed to clients is around $467.1 million, or 460 billion won. Lee wrote in the company notice:
A substantial portion of the virtual assets recovered after the suspension of deposits or withdrawals last year is being securely held by prosecutors in a cold wallet”
Three Haru Invest executives, including two of its CEOs, were detained by South Korean authorities in February on suspicion of scamming more than 16,000 investors by promising principal protection and substantial returns on cryptocurrency deposits made between March 2020 and June 2023.
According to reports, the plan was discovered in June 2023 when the site suddenly stopped accepting withdrawals, causing a great deal of anxiety.
At about the same time, Haru laid off about 100 of its staff members and clients were unable to deposit digital assets on the site.
