S. Korean Crypto Firm Delio Plans Debt Transfer Amid $180M Embezzlement Scandal

Fraud South Korea

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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June 20, 2024 05:37 EDT

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The South Korean virtual asset deposit services company Delio announces to establish a new corporation to transfer debt as it faces embezzlement charges.

According to a recent report by the Chosun Daily, Delio announced its intention to create a new entity to assume its debts and sell its existing corporation to repay creditors amid a scandal involving the alleged embezzlement of $180 million (250 billion won) worth of virtual assets.

250 Billion Won Embezzlement Scandal

Delio initially attracted investments by promising returns of approximately 10% per year on deposits of cryptocurrencies like Bitcoin and Ethereum. In June 2023, the company abruptly halted services without prior notice, causing significant financial loss among its investors.

The suspension led to a controversy with accusations of fraud and embezzlement against Delio’s CEO Jung Sang-ho. Jung was accused of misappropriating around 250 billion won from approximately 2,800 investors between August 2021 and June 2023.

The legal troubles escalated when Jung was indicted for fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violating the Specific Financial Information Act. Though Jung avoided being arrested, the ongoing trial has impacted the company’s operations and reputation.

Company Reveals Debt Transfer Plan

Delio announced a plan today (June 20) to transfer its debt to a newly established corporation. The company intends to create this new entity to assume all bonds and liabilities, effectively separating its debt from its existing operations.

“We will establish a new corporation and transfer all of Delio’s bonds and liabilities to the new corporation,” stated the company, “Delio, which has no debt, will be sold to a company that needs a VASP and the sale proceeds will be transferred to a new corporation that has taken on the debt.”

The report indicated that the plan seems possible to the company, and it expects the potential acquisition to take place as soon as July 2024.