Recent reports indicate that Delio, a Bitcoin lending firm based in South Korea, intends to take legal action against the Financial Service Commission (FSC) for allegedly misinterpreting the law.
The FSC has accused Delio of fraud and embezzlement and has imposed heavy penalties on the firm. However, Delio claims that the FSC misunderstands the law and that there are no clear regulations governing virtual asset deposit and management products.
The report reveals that South Korea’s Financial Intelligence Unit (FIU) has taken various actions against Delio, including the removal of its CEO, the imposition of a $1.34 million fine, and a three-month suspension of its business. Additionally, the FIU has seized several of Delio’s assets, causing serious concerns about the company’s future.
Why is the Bitcoin (BTC) lender being accused of fraud?
The core issue revolves around differing interpretations of existing laws, particularly the Special Financial Services Act. There is no consensus on whether a lending company that accepts digital currencies as collateral should be categorized as a virtual asset business operator. Furthermore, there is disagreement regarding whether the term ‘lockup’ corresponds to the same concept as ‘storage’ under the Act.
Delio argues that the current law does not clearly define virtual asset deposits and management products as financial products. The lawyer representing the company asserts that the law lacks crypto-related regulations. This lawyer also contends that the authorities are interpreting virtual asset deposits and management products as financial investment products in an arbitrary manner, which, according to the lawyer, amounts to a misinterpretation of the law.