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S Korean Crypto Lender Delio Suspends Withdrawals – What Do We Know?

Tim Alper
Last updated: | 2 min read
A leather wallet rests on a table, on top of South Korean banknotes. A metal token intended to represent a Bitcoin token leans against the wallet.
Source: tanaonte/Adobe

The South Korean crypto lending platform Delio says it is “temporarily” suspending deposits and withdrawals, as financial regulators say they are “investigating” the situation.

The platform is a crypto lending service and wallet, which holds an official virtual asset service provider (VASP) operating license.

In a statement, the firm said that it would halt deposits and withdrawals on the platform as of UTC 09:30 on June 14.

Delio blamed the move on “the aftermath” of domestic firm Haru Invest’s own decision to suspend crypto deposits and withdrawals this week.

Delio said Haru’s move had “dramatically increased market volatility and increased confusion among investors.”

A presentation slide explaining the number of lending applications executed on the Delio crypto platform.
Source: Delio/Medium

The newspaper Herald Kyungjae quoted Jeong Sang-ho, Delio’s CEO, as “admitting” that “some” of its customer assets had been invested on Haru’s platform.

He said:

“I cannot disclose the exact amount, but it is true that some of our customers’ funds were deposited with Haru Invest.”

An image showing the cryptoasset total value utlized by the crypto platform Delio.
Delio asset breakdown figures from the platform’s official website.

Jeong added:

“We have suspended withdrawals to calm down a rapid increase in withdrawals [of funds from the Delio platform] in the aftermath of the Haru Invest announcement. It is true that some of our [customers’] assets were managed [by] Haru Invest. We will try to proactively communicate more details to our investors.”

Jeong said his firm “intends to resolve the issue as soon as possible.”

Some have accused Haru of attempting to execute a “rug pull” after its offices were found deserted, but the firm’s executives have denied the allegations.

The executives claimed that their offices had been closed after a decision to switch to remote work models.

Haru offered customers annual interest rates of up to 12% for Bitcoin (BTC) deposits.

Delio Withdrawals Suspended: Repercussions for South Korean Crypto Community?

The nation’s biggest crypto exchange Upbit has responded by announcing that it will block all withdrawals to Delio-based wallets.

In an official Upbit notice, the exchange said its “decision” was “made in the interest of investor protection.”

South Korean financial regulators began conducting on-site inspections of licensed VASPs earlier this year.

Under South Korean law, two types of VASP licenses can be issued: Exchanges and wallet providers that offer crypto-to-fiat trading services need to secure banking partnership deals.

But platforms that do not offer KRW trading, such as Delio, can apply for a permit that only allows them to trade crypto-to-crypto.

Haru, meanwhile, has no permit because it claims to deal exclusively with overseas-based customers.

The South Korean media outlet GetNews said regulators had “confirmed that they have not yet conducted an on-site inspection of wallet operators like Delio.”

A spokesperson for the Financial Intelligence Unit (FIU) said:

“We will look into this matter. And if illegal activities, such as embezzlement or breach of trust, are discovered, we will cooperate with the investigating authorities. And we will help them take necessary measures.”

The FIU spokesperson added:

“There are allegations that Haru Invest […] may be connected to the Delio [announcement]. But we cannot confirm the veracity of these claims, so we need to investigate further.”