Delio CEO Defends No Principal Protection Amid $181M Debt Scandal & Legal Tussles
Summary:
Delio's CEO, Jung Sang-ho, facing charges for the collapse of the cryptocurrency platform and owing creditors an estimated $181 million, defends the stance of no "principal protection" for investors. Jung and his legal team claim that the company's operations involved unsecured assets, making only 5% of total assets. In contrast, creditors argue over the neglect of their claims. Jung's trial is set for July 23. Meanwhile, Delio's affiliate Haru Invest ceased withdrawals and deposits due to a "consignment operator" issue, prompting layoffs and legal action against its service partner.
The CEO of failed South Korean cryptocurrency yield platform Delio, Jung Sang-ho, who is facing a debt to creditors amounting to nearly 250 billion won ($181 million), blatantly told its investors that there was no guarantee of their capital at the time they transferred their assets to the platform. Local news outlet Etoday Korea covered this statement made by Jung during his second court hearing at Seoul Southern District Court, where he stated that he never promised a safeguard for the principal amount. He insisted that these conditions were clearly laid out in their clauses, and restated that the Korea Financial Intelligence Unit (FIU) had mandated them to inform investors of this fact.
Creditors vehemently questioned the CEO's stance, arguing why deposits and staking were treated as investments. The prosecutors also contended that assuring principal was part of customer care. Jung's lawyers, however, countered by asserting that the assets given away by the platform were unsecured and that these represented merely 5% of their total portfolio following the collapse of FTX.
Jung faces charges of deceit, misappropriation and violation of trust over the debacle of the Delio platform. His next court hearing has been scheduled for July 23. In 2022, Delio had distinguished itself as the pioneering Korean firm in the crypto lending and deposit realm to earn approval as a Virtual Asset Service Provider (VASP) from the FIU. It was stated then that Delio, having earned its Information Security Management Systems (ISMS) certification that year, had established and operated an advanced information security system on par with financial entities like Hana Bank.
On June 13, 2023, Haru Invest, Delio's affiliate company, halted withdrawals and deposits, claiming problems with a "consignment operator", subsequent to which Delio followed suit, presumably to limit counterparty risk. Since then, Haru Invest has seemingly trimmed its workforce significantly and is purportedly pursuing legal action against its service associate.
Prosecutors contend that Haru Invest fell apart due to its top officials unscrupulously diverting a substantial portion of its client's cryptocurrency deposits for reinvestment, from March 2020 to June 2023. These allegations claim the officials falsely promoted Haru as a steady business supporting "risk-free diversified investment techniques". Delio's CEO, Jung Sang-ho, during a meeting with investors on June 17, 2023, assured the company's intention to restart withdrawals without promising any specific timeline. On June 27, 2023, the company began the withdrawal process for parts of its staking services.
Published At
6/25/2024 6:38:20 PM
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