Crypto Delio lender warns normal operations at risk after asset seizure

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South Korean cryptocurrency lending firm Delio has reportedly raised concerns about whether it can continue to provide normal services to clients after its assets were confiscated by a local financial regulator.

In a blog post dated July 22 translated from Korean, DiLeo said that an ongoing legal battle with depositors and a search process and July 18 seizure of the company’s assets, led to “all assets owned by clients and the company, as well as other wallets and ledgers” being seized by the FSC.

Delio explained that the recent measures made it difficult for the company to provide normal services, adding that there was also a need to prevent the dispersal of Delio’s assets in favor of depositors.

Delio has suspended interest payments to users of deposits and safes effective July 24, according to the publication. The company added that services that require additional expenses, such as interest payments or operating expenses, have been suspended.

On June 14, Delio abruptly halted withdrawals and deposits on its platform “in order to protect the assets of customers currently held safely” — from market volatility caused by halting deposits and withdrawals at sister lending company Haru Invest.

Haru Invest itself had halted withdrawals on June 13 after an investigation revealed that some information provided by shipping company B&S Holdings was false. The next day, Haru Invest announced that it had begun legal action of its own against the B&S holdings.

Three days later on June 17, Delio’s CEO, Jung Sang-ho, clarified that the company would resume withdrawals, but gave no timeline for the return of full functionality to the platform. On June 27, the company reopened withdrawals for some staking services.

However, according to a June 30 report from Digital Asset, the move did not stop the FSC from launching an investigation and later prosecution of Delio based on the sudden suspension of withdrawals.

Related: British banks risk losing their licenses to deal with clients over political opinions

The FSC has sued Delio for fraud, embezzlement and breach of trust in connection with the “unilateral decision” to suspend user deposits and withdrawals on June 14. In addition, its CEO Jeong Sang-ho and others have been banned from leaving the country.

Founded in 2018, Delio is one of the largest cryptocurrency lending platforms in South Korea, offering a wide range of custody, lending and custody services. According to the company’s website, it owns nearly $1 billion in Bitcoin (BTC), $200 million in Ether (ETH) and about $8.1 billion in altcoins.

Cointelegraph contacted Delio for comment but did not receive an immediate response.

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