South Korean Crypto Platform Delio Declared Bankrupt, Owes $1.75B to Customers

Delio's liquidation proceedings are underway, allowing creditors to submit claims until Feb. 21, 2025. A creditors' meeting is planned for March 19, 2025.

South Korean crypto platform Delio has been declared bankrupt by a Seoul court, owing 245 billion won ($1.75 billion) to customers. Many have been unable to withdraw funds since June 2023.

The court has set a deadline of Feb. 21, 2025 for creditors to submit their claims in Delio's liquidation proceedings. A creditors' meeting will be held on March 19, 2025 to discuss the company's remaining assets and liabilities.

According to court records, Delio entrusted a significant portion of its customers' deposits to a management company, which in turn deposited the funds into accounts linked to the FTX platform. A court official stated,

“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.”

With the collapse of FTX in November 2022, Delio was unable to recover these assets, leading to a liquidity crisis that affected 2,800 customers.

Delio's bankruptcy follows a series of regulatory and legal challenges. In September 2023, the South Korea Financial Intelligence Unit (FIU) fined Delio 1.83 billion won ($1.34 million) and recommended that CEO Jeong Sang-ho be removed from his position. Delio responded by filing a lawsuit against the FIU, alleging that it had misinterpreted the laws governing virtual asset platforms.

Jeong Sang-ho is also facing charges of fraud, embezzlement, and breach of trust. During 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, in light of its financial troubles, the company proposed transferring its debt to a new entity and selling itself to another firm seeking VASP status.

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

The turmoil at Haru Invest escalated 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 together with other executives for alleged misconduct.