YEREVAN (CoinChapter.com) — South Korean crypto platform Delio has been declared bankrupt, with a Seoul court confirming the ruling on Nov. 22, 2024. The platform owes 245 billion won ($1.75 billion) to customers, many of whom have been unable to withdraw funds since June 2023.

Delio Crypto Finance Group. Source: Korea Coin Group Delio Creditors’ Meeting Scheduled

Delio’s liquidation proceedings are underway, allowing creditors to submit claims until Feb. 21, 2025. A creditors’ meeting is planned for March 19, 2025, where affected parties will discuss the company’s remaining assets and liabilities.

Court records revealed Delio had entrusted a large portion of its customers’ deposits to a management company, which then deposited the funds into accounts linked to the FTX platform. A court official confirmed,

“The debtor leased and entrusted the management of customer-deposit virtual assets to the management company, but a large part of it was deposited and managed in the FTX account.”

The collapse of FTX in November 2022 left Delio unable to recover these assets, leading to a liquidity crisis that impacted 2,800 customers.

Legal Actions Surrounding Delio Bankruptcy

The bankruptcy comes after Delio faced a series of regulatory and legal challenges. The South Korea Financial Intelligence Unit (FIU) fined Delio 1.83 billion won ($1.34 million) and recommended CEO Jeong Sang-ho be removed from his position in September 2023. Delio responded with legal action, claiming the FIU had misinterpreted laws governing virtual asset platforms.

Mr. Jeong (51), CEO of Delio, attended a suspect interrogation on April 25 at the Seoul Southern District Court. He faced accusations of violating the Act on Aggravated Punishment for Specific Economic Crimes (fraud). The charges stem from suspending virtual asset deposits and withdrawals worth 250 billion won. Despite the allegations, Mr. Jeong avoided arrest that day. Source: News 1

Jeong Sang-ho, meanwhile, faces charges of fraud, embezzlement, and breach of trust. In court proceedings, Jeong argued that customers’ deposits were not “principal protected” under the platform’s terms.

Delio, founded in 2018, was the first South Korean company to achieve virtual asset service provider (VASP) status in 2022. However, following its financial troubles, the company proposed transferring its debt to a new entity and selling itself to another firm seeking VASP status.

Haru Invest Bankruptcy Adds to FTX Collapse Impact

Delio’s sister company, Haru Invest, also declared bankruptcy on November 20, 2024, after ceasing operations on the same day as Delio in June 2023. Haru Invest had filed a lawsuit against B&S Holdings, accusing it of providing false financial reports, which contributed to its downfall.

The turmoil at Haru Invest intensified in August 2023 when CEO Hugo Hyungsoo Lee was stabbed. The incident occurred during bankruptcy proceedings and involved an angry customer. Earlier, in February, authorities arrested Lee. He now faces charges with other executives for alleged misconduct.

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