175 billion lost as Delio declares bankruptcy

South Korean crypto platform Delio has officially been declared bankrupt by the Seoul Rehabilitation Court.

Customers holding a staggering $1.75 billion in virtual funds have been unable to withdraw their investments since mid-2022.

The platform’s collapse underscores the risky and unpredictable nature of digital asset investments, despite their potential for high returns.

The Seoul Rehabilitation Court declared Delio bankrupt on Friday, marking the end of the company’s operations.

Approximately 2,800 investors are directly impacted, unable to recover their crypto assets.

Analysts point out that corporate bankruptcy occurs when a company cannot repay its debts, triggering a legal process to liquidate assets and repay creditors.

Delio’s case is a textbook example of this, with its remaining assets set to be converted into cash for distribution.

Reports indicate that creditors have until February 21, 2025, to submit claims to the court.

A creditors' meeting is scheduled for March 19, 2025, where asset distribution plans will be outlined.

While the situation is bleak, this process offers a glimmer of hope for affected investors.

A court official explained that Delio’s inability to honor withdrawals and its operational suspension were the main factors behind its collapse.

Delio operated as a deposit and management service, earning profits by investing customers’ virtual assets like Bitcoin.

However, a significant portion of these assets was deposited into accounts with FTX, the now-defunct cryptocurrency exchange.

After FTX’s bankruptcy in November 2022, Delio was unable to recover those funds, leading to its own financial implosion.

In September 2023, South Korean regulators took legal action against Delio, accusing it of violating financial laws.

The Financial Intelligence Unit (FIU) suspended Delio’s operating license, fined the company $1.34 million, and called for CEO Jeong Sang-ho’s dismissal.

Jeong is currently facing charges of fraud, embezzlement, and breach of trust, but he denies wrongdoing, stating that investors were informed their deposits were not “principal protected.”

Established in 2018, Delio gained status as a virtual asset service provider (VASP) in 2022, becoming the first South Korean company to achieve this recognition.

Despite its initial promise, mismanagement and unfortunate ties to FTX ultimately led to its demise.

Delio’s collapse serves as a stark reminder of the inherent risks in the cryptocurrency market.

Investors should approach digital assets with caution, ensuring a thorough understanding of potential losses before entering the market.