Crypto lender Delio warns normal operations in jeopardy after asset seizures

South Korean crypto lending firm Delio has reportedly raised concerns over whether it can continue to provide normal services to clients after having its assets seized by a local financial regulator. 

In a July 22 blog post translated from Korean, Delio said an ongoing legal battle with depositors and a July 18 search and seizure of the company’s assets, resulted in “all assets owned by customers and the company, as well as other cold wallets and ledgers” being seized by the FSC.

Delio explained the recent actions have made it difficult for the firm the provide normal services, adding there is also a need to prevent the scattering of Delio’s property in the interest of depositors.

Delio suspended interest payments for its deposit and vault users as of July 24, according to the post. The firm added that services that require additional expenses, such as interest payments or operational expenses have been suspended.

On June 14, Delio abruptly halted withdrawals and deposits on its platform “in order to safely protect the assets of customers currently in custody” — from market volatility caused by the halting of deposits and withdrawals at sister lending company Haru Invest. 

Haru Invest itself had halted withdrawals on June 13 after an investigation revealed that certain information provided by its consignment operator B&S Holdings was false. The next day, Haru Invest announced that it was launching legal proceedings of its own against B&S holdings.

Withdrawal Suspension Notice

As a result of the recent suspension of digital asset deposits and withdrawals at Haru Invest, there has been a rapid surge in market volatility and a state of perplexity among investors.

To ensure the preservation of our valued customers’ assets,…

— Delio Global | Web3.Crypto (@happydelio) June 15, 2023

Three days later on June 17, Delio CEO Jung Sang-ho explained that the firm would resume withdrawals, but did not provide any timeline for when full functionality would return to the platform. On June 27, the company reopened withdrawals for some of its staking services.

However, according to a June 30 report from Digital Asset, the move has not stopped the FSC launching an investigation into and later suing Delio based on the abrupt suspension of withdrawals.

Related: UK banks risk losing licenses for debanking customers over political views

The FSC sued Delio for fraud, embezzlement and breach of trust related to the “unilateral decision” to suspend user deposits and withdrawals on June 14. Additionally, its CEO Jeong Sang-ho and others were banned from leaving the country.

Founded in 2018, Delio is one of South Korea’s largest crypto lending platforms, offering a wide range of custody, lending and staking services. According to the firm’s website, it holds approximately $1 billion in Bitcoin (BTC), $200 million in Ether (ETH) and approximately $8.1 billion in altcoins.

Cointelegraph contacted Delio for comment but did not receive an immediate response.

Magazine: South Korea’s unique and amazing crypto universe