South Korean crypto lender Delio has been forced to halt certain interest payments following a recent investigation resulting in asset seizure (of Delio and its customers) by local financial regulators. The lending firm has reportedly raised concerns about its ability to continue providing regular services to clients following the seizure.
In a July 22 blog post, Delio revealed that the South Korean Financial Services Commission (FSC) had seized all assets owned by customers and the company, as part of a legal battle with depositors. Assets seized include cold wallets and ledgers.
These recent actions have created significant challenges for the firm in maintaining its regular services. According to the firm, there is a need to prevent the scattering of its property to protect the interests of depositors.
In light of these events, Delio decided to suspend interest payments for its deposit and vault users starting July 24. In addition, the company has temporarily suspended services that require additional expenses such as operational expenses
In mid June, Delio had halted withdrawals and deposits on its platform “in order to safely protect the assets of customers currently in custody” — from market volatility caused by the halting of deposits and withdrawals at sister lending company Haru Invest.
Haru Invest suspended withdrawals on June 13 after discovering that certain information provided by its consignment operator B&S Holdings was false. As such, they initiated legal proceedings against B&S Holdings on June 14.
Consequently, Delio’s CEO, Jung Sang-ho announced on June 17 that the firm would resume withdrawals, with no specific timeline for the complete restoration of platform functionality. Later in June, the company reopened withdrawals for some of its staking services.
However, despite these efforts, the FSC did not cease its investigation into Delio and filed a lawsuit against the company, accusing it of fraud, embezzlement, and breach of trust related to the unilateral decision to suspend user deposits and withdrawals on June 14. Furthermore, the FSC imposed travel bans on CEO Jung, and others involved in the case.
Established in 2018, Delio is one of South Korea’s largest crypto lending platforms, providing a wide range of custody, lending, and staking services. Per the firm’s website, it holds approximately $1 billion in Bitcoin (BTC), $200 million in Ether (ETH), and around $8.1 billion in altcoins.