South Korea’s Delio declared bankrupt with $1.75B in assets lost

South Korean virtual asset deposit platform Delio was declared bankrupt by a court in Seoul on Nov. 22, according to multiple local press reports. Delio, which owes customers 245 billion won ($1.75 billion), halted withdrawals last year.

Some hope of making customers whole

Delio will begin liquidation proceedings. Customers can make claims through Feb. 21, 2025, and the first creditors’ meeting will be held on March 19, 2025. Reports quote a court official as saying:

“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.”

As a result, the platform was unable to recover its assets after the November 2022 bankruptcy of FTX and was unable to return customer assets after June 13, 2023. There are about 2,800 customers affected by the bankruptcy.

A welter of court actions

Delio countersued South Korean authorities for misinterpretation of the law in September 2023 after the government’s Financial Intelligence Unit (FIU) recommended the dismissal of Delio CEO Jeong Sang-ho on Sept. 1, 2023. Delio was fined 1.83 billion Korean won ($1.34 million) and had its business license temporarily suspended at the same time.

Delio, founded in 2018, was the first Korean crypto firm to receive virtual asset service provider (VASP) status from the FIU in 2022. In June of this year, Delio proposed to set up a new company, transfer its debt to it and then sell itself to a buyer looking to obtain VASP status.

Jeong Sang-ho is on trial for fraud, embezzlement and breach of trust. He argued in court in June that customers’ deposits were not “principal protected” on the platform.

Delio’s sister company, Haru Invest, ceased operations on the same day as Delio. It filed suit against B&S Holdings, a consignment operator, on June 14, 2023, for providing it with false management reports. Haru Invest was declared bankrupt on Nov. 20.

Haru Invest CEO Hugo Hyungsoo Lee was stabbed in the neck by an irate customer during bankruptcy proceedings in August. Lee had been arrested in February along with two other executives.

Source: https://cointelegraph.com/news/delio-bankruptcy-south-korea-ftx-impact