Delio, known for its innovative approach to digital asset lending, has been a prominent player in the crypto space. However, recent market fluctuations and internal operational challenges have led to a crisis that the company is now struggling with. In recent news, creditors of Delio have initiated corporate recovery proceedings. The case, filed at the Seoul Bankruptcy Court, marks a pivotal moment in the company’s trajectory and underscores the challenges faced by the crypto lender.
Delio Investors Seek Legal Recourse Following Haru Invest Incident
On the 29th, it was verified that investors of Delio, a digital asset deposit service, have sought legal recourse by applying for corporate rehabilitation procedures in court. This move comes in the wake of the ‘Haru Invest Incident’ that led to the suspension of withdrawals. Interestingly, this development occurred just two days after the company’s announcement on the 27th, stating that the withdrawal of certain digital assets would recommence.
As per the latest updates from court and industry insiders, Delio’s creditors have recently taken legal action against the company. They have filed for corporate rehabilitation procedures at the Seoul Bankruptcy Court. The application was submitted through LKB&Partners, a law firm currently representing a class action lawsuit against both Haru Invest and Delio.
This move comes in the wake of a sudden halt in deposit and withdrawal services by Delio on the 14th, a consequence of issues related to Haru Invest. Interestingly, just a day prior to this, at 9:40 am on the 13th, Haru Invest had also suspended its deposit and withdrawal services. Both Haru Invest and Delio are centralized finance (CeFi) platforms, offering interest on deposits of digital assets like Bitcoin. It has been reported that Delio had entrusted most of its customer assets to Haru Invest.
These two companies hold significant positions in the Korean market, with Haru Invest and Delio being the 1st and 2nd largest coin deposit service operators in the country, respectively. Notably, Delio has been reported to the Financial Services Commission as a virtual asset service provider (VASP), further underlining its importance in the industry.
The sudden halt in services and the subsequent legal proceedings have highlighted the risks and challenges in the CeFi sector, particularly in the context of digital asset management.
A Chain Reaction Caused Delio To Face Trouble
Haru Invest had entrusted ‘B&S Holdings’ with the task of managing the digital assets deposited by its customers. However, when B&S Holdings incurred losses due to the FTX incident last year, it triggered a domino effect that led to the suspension of withdrawals from Delio.
In a blog post on 14 June, HaruInvest accused B&S Holdings of deceit, alleging that they provided fraudulent management reports, thereby misleading the company and its users. As a result, HaruInvest has filed a criminal complaint against B&S Holdings and is planning to initiate a civil lawsuit.
In a recent update on the 27th, Delio announced on its website that it would resume deposits and withdrawals of certain digital assets related to staking services, which had previously been suspended. The digital assets targeted for resumption include Cardano (ADA), Solana (SOL), Tezos (XTZ), Polkadot (DOT), Kusama (KSM), and Near (NEAR).Â
However, it’s important to note that all these digital assets, for which the company has allowed deposits and withdrawals, are not directly involved in the current situation. As the court proceedings intensify, it is highly probable that withdrawals of these digital assets may also be put on hold.
