South Korean Crypto Yield Firm Haru Invest Declared Bankrupt After $1 Billion ‘Rug Pull’

South Korean crypto yield platform Haru Invest, implicated in a $1 billion fraud, has officially been declared bankrupt by the Seoul Rehabilitation Court, as per a local news report.

Haru Invest, operated by Haru Management Limited, lured over 16,000 investors by guaranteeing principal safety and offering lucrative returns on crypto deposits. However, the scheme unraveled in June 2023 when the platform abruptly halted withdrawals, triggering widespread panic.

Investigations later revealed the company had defrauded investors of 1.4 trillion won (approximately $1 billion USD).

The company, incorporated in the British Virgin Islands but primarily operating from South Korea, was declared insolvent due to its inability to repay debts. The court determined jurisdiction based on its significant domestic operations, underscoring the global reach of crypto fraud and its localized impact.

Top executives of Haru Invest, including its CEO Hugo Hyungsoo Lee, were arrested in February this year in connection with the same fraud and laundering users’ funds worth $1 billion.

Haru Management to be Liquidated to Make Recovery

The first creditors’ meeting is scheduled for February 11, 2025, where a bankruptcy administrator will assess Haru Management’s financials and begin the process of liquidating assets. Investors hope this will pave the way for at least partial recovery.

Unlike criminal proceedings, where asset seizure is limited, the bankruptcy process empowers the trustee to take control of the company’s accounts, remaining coins, and bonds. This offers a structured approach to identify and distribute available assets among the defrauded investors.