South Korean crypto lending firm Delio has reportedly raised concerns about whether it can continue to provide normal services to clients after its assets were seized by a local financial regulator.
In a blog post translated from Korean on July 22, the ongoing legal battle with Delio depositors and the search and seizure of the company’s assets on July 18 resulted in the South Korean Financial Services Commission seizing “all assets and other cold wallets and ledgers owned by customers and the company.”
It explained that Delio’s recent actions had made it difficult for the firm to provide normal services, adding that it was necessary to prevent the dispersion of Delio’s assets in the interest of investors.
Delio has suspended interest payments to its deposit and wallet users from July 24, the post said. The firm added that services that required additional expenses such as interest payments or operating expenses were temporarily suspended.
On June 14, Delio abruptly halted withdrawals and deposits on its platform to “safeguard the assets of customers currently in custody” – following market volatility caused by the halt of deposits and withdrawals at sister lending company Haru Invest.
Haru Invest itself had suspended the withdrawal on June 13 after an investigation found that some of the information provided by commodity operator B&S Holdings was incorrect. The next day, Haru Invest announced it was launching its own legal action against B&S Holdings.
Withdrawal Suspension Notice
The recent suspension of digital asset investments and withdrawals at Haru Invest resulted in a rapid spike in market volatility and confusion among investors.
To ensure the protection of assets of our valued customers,…
– Delio Global | Web3.Crypto (@happydelio) June 15, 2023
After three days, Delio CEO Jung Sang-ho explained that the company would resume the withdrawal, but gave no timeline for when full functionality would return to the platform. On June 27, the company reopened withdrawals for some of its stacking services.
However, according to a June 30 report from Digital Asset, the move hasn’t stopped the FSC from launching an investigation and later suing Delio based on the sudden suspension of withdrawals.
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The FSC sued Delio for fraud, embezzlement and breach of trust related to its “unilateral decision” to suspend user deposits and withdrawals on June 14. In addition, its CEO Jeong Sang-ho and others have been banned from leaving the country.
Founded in 2018, Delio is one of the largest crypto lending platforms in South Korea, offering a wide range of custody, lending and staking services. According to the firm’s website, it has about $1 billion in Bitcoin (BTC), $200 million in Ether (ETH) and about $8.1 billion in altcoins.
Cointelegraph reached out to Delio for comment but did not receive an immediate response.
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