Jung Sang-ho, CEO of South Korean cryptocurrency return platform Delio, which collapsed last year and owes creditors around 250 billion won ($181 million), clearly told the investors that their deposits were not “primarily protected” when they transferred their assets. .. Platform.
According to a report by local news agency Itaday Korea, during the second session of the first criminal trial held on June 25 at the Seoul Southern District Court, Jung told the audience: “I never promised to guarantee the principal. This was clearly stated in the terms and conditions, and the Korean Financial Intelligence Unit (FIU) asked us to notify investors about this via our website.
However, creditors quickly responded: “Why are deposits and mortgages considered investments? » The prosecution also claimed that the main guarantee was a duty of care to customers.
Meanwhile, Young’s legal team argued that the prosecution’s and creditors’ claims were “factually incorrect,” saying the assets loaned by the platform were unsecured and its operational transactions amounted to “only 5 % of their assets” after the collapse of FTX. .
Jung is currently facing charges of fraud, embezzlement and breach of trust following the collapse of the Delio platform. The next CEO meeting is scheduled for July 23.
In 2022, Delio became the first Korean cryptocurrency lending and depository company to obtain Virtual Asset Service Provider (VASP) approval from the Financial Intelligence Unit. “Delio obtained Information Security Management Systems (ISMS) certification last year and has built and operated a high-level information security system at financial institutions such as Hana Bank. With VASP approval, Delio plans to offer reliability-focused services, the company wrote at the time.
On June 13, 2023, Delio’s sister company Haru Invest suspended withdrawals and deposits, citing an issue with the “shipping operator.” This move prompted Delio to do the same the next day, likely due to counterparty risk. Since this announcement, Haru Invest has reportedly laid off most of its employees. The company says it is currently taking legal action against its service partner.
Prosecutors alleged that Haru Invest collapsed because its executives misappropriated most of its customers’ cryptocurrency deposits by reinvesting assets from March 2020 to June 2023. The executives allegedly falsely advertised that Haru was operating a stable business using “various techniques without investment”. .”
During an investor meeting on June 17, 2023, Delio CEO Jung Sang Ho explained that the company would resume withdrawals, but without a specific timeline at the time. On June 27, 2023, the company began opening withdrawals for a portion of its staking services.
Related: Haru Invest executives arrested in South Korea for embezzlement
