Is $1.75 Billion Lost? Delio, South Korea’s Crypto Giant, Files Bankruptcy!
In a shocking turn of events, a South Korean cryptocurrency platform, Delio, has been officially declared bankrupt by a local court. This declaration comes on the heels of thousands of customers being unable to withdraw their hard-earned digital assets, totaling a staggering $1.75 billion. This incident serves as a stark reminder that while the allure of cryptocurrency can be enticing, the market is riddled with volatility and risks that can catch even the most experienced investors off guard.
Breaking News: Court Declares Delio Bankrupt
According to the Seoul Rehabilitation Court, Delio has officially shuttered its doors. The court’s announcement on Friday confirmed that the digital asset firm has gone bankrupt, leaving many in the crypto community reeling.
Since mid-2022, Delio halted all withdrawal activities, trapping approximately 2,800 investors without access to their funds. The impact is far-reaching, with customers now facing the reality of lost investments amounting to $1.75 billion.
[단독] ‘2500억 사기’ 델리오 파산https://t.co/WcGeIDiaQd#델리오 #delio #가상자산예치업체
— KCG(Korea Coin Group) (@kdisla) November 22, 2024
Delio signboard. Source: Park Beom-su/Digital Asset
Experts explain that corporate bankruptcy is a legal process that arises when a business can no longer fulfill its financial obligations. In these cases, a court intervenes to convert the firm’s remaining assets into cash which is then distributed to creditors. Delio’s case serves as a textbook example of corporate bankruptcy in the fast-paced world of cryptocurrency.
A Ray of Hope for Affected Investors
Despite the grim news, there is a slight flicker of hope for Delio’s investors. Reports indicate that following the court’s bankruptcy declaration, a creditors’ meeting is scheduled, allowing affected parties to file claims. The South Korean court has set a deadline for claims submission by February 21, 2025, with a creditors’ meeting planned for March 19, 2025. This process may offer some avenues for investors to recover their funds.
What Led to Delio’s Downfall?
A court official revealed that the primary factor behind Delio’s bankruptcy stems from its inability to repay investors due to the suspension of withdrawals and operational constraints. The platform was designed to manage deposits and generate profits through interest on virtual assets like Bitcoin lodged by clients.
However, a significant portion of these entrusted assets was reportedly placed in an account with FTX, which collapsed in November 2022. This catastrophic failure led to Delio halting all withdrawals, leaving many investors stranded.
Delio’s Leadership Pushes Back
In a dramatic twist, Delio’s CEO, Jeong Sang-ho, is currently embroiled in legal controversies, facing accusations of fraud, embezzlement, and breach of trust. In September 2023, the firm challenged the South Korean government’s interpretation of the law, particularly regarding a proposal to oust him from his position. Additionally, the authorities have imposed a hefty fine of $1.34 million and suspended Delio’s operating license.
Founded in 2018, Delio made headlines by becoming the first South Korean company to earn virtual asset service provider (VASP) status in 2022, signaling a significant milestone in the crypto landscape.
Featured image from The Independent, chart from TradingView
