July 24, 2023 at 11:54 GMTModified date: July 24, 2023 at 11:54 GMT
July 24, 2023 at 11:54 GMT

South Korea’s Delio cuts services following raid

Delio, one of the largest crypto lending companies in South Korea, has announced cutbacks in its services effective on Monday.

South Korea’s Delio cuts services following raid

Delio, one of the largest crypto-lending companies in South Korea, has announced cutbacks in its services effective on Monday. Citing difficulties in providing services as usual, it has now halted interest payments for all its users.

The move comes in the background of last week’s ‘search and seizure’ by local prosecutors. This was over Delio abruptly halting its withdrawals back in June. All of the company’s owned assets, including cold wallets and books, were confiscated by the prosecution.

Delio is also facing an ongoing hearing of a rehabilitation case filed by some of its deposit customers. As a result of these struggles, the lender has failed to provide services as usual and feels that it should protect the interests of all deposit customers by safeguarding Delio’s property.

Therefore, payment for some of the services has been stopped and interest payments have been asked to be accompanied by additional expenses such as operating expenses. This should be based on Article 5 of its Terms of Service and Conditions and Article 8 of Terms of Use. The change is set to be effective from today 24 July.

Back in June, Delio had also ceased withdrawals and deposits in the aftermath of the suspension of digital asset deposits and withdrawals which caused a sharp increase in market volatility and increased confusion among investors. This happened in Haru Invest, a Singapore-based crypto investment manager that Delio reportedly worked with. It then decided to inevitably protect the assets of its current customers and made the change “temporarily” until the situation gets resolved.

Some seven hours before the suspension of user withdrawals, Delio reportedly withdrew 9.24 billion won (US$7.2m) worth of its crypto holdings, as claimed by South Korean news agency Newsis. These were then said to be sent to three anonymous external wallets that were not disclosed by the company nor the executives.

In the same month, the company was also hit with a lawsuit filed by 100 investors, represented by law firm LKB & Partners. This was against the executives of Haru and Delio with fraud charges to the Seoul Southern District Prosecutor’s Office, according to Newsis.

With the combined damages of the plaintiffs amounting to about 50 billion Korean won (US$39m), it was alleged that the two companies promised risk-free high returns to depositors while entrusting customer assets with risky futures, options and other trades without proper disclosure.

As per its official website, Delio strives to become a “global TOP5 virtual asset management company beyond the No. 1 virtual asset company in Korea”. It boasts about its high growth rate of more than 300% per annum and a rapidly increasing size of its assets.

It also prides itself on having business partnerships with top-tiers in each area. This includes large corporations, legacy finance, and virtual asset fintech companies, with the most recent ones being SK, Lotte, Shinhan Capital, Shinhan Investment & Securities (former. Shinhan Financial Investment) and global virtual asset companies such as Blockdaemon and Fireblox.

Amongst many other things, it also provides a variety of financial services through partnerships with global virtual asset exchanges such as Binance and OKX.