- Prosecutors seek harsh sentence as Delio scandal shocks crypto investors
- Massive losses and deception claims deepen crisis around Delio leadership
- Court decision could reshape crypto regulation and investor protection efforts
South Korean prosecutors have intensified a major crypto case by seeking a 20-year prison sentence for Delio CEO Jeong Sang-ho, following a prolonged investigation into the sudden withdrawal suspension that left thousands of users unable to access their funds. During closing arguments at the Seoul Southern District Court, authorities outlined allegations that Jeong violated laws governing serious financial crimes, while emphasizing that his leadership decisions played a central role in the platform’s operational collapse and investor losses.
According to prosecutors, the company misappropriated approximately 250 billion won in crypto assets, equivalent to about $168.8 million, affecting nearly 2,800 investors from August 2021 to June 2023. Additionally, the case reflects broader instability within South Korea’s crypto lending sector, particularly after the fallout from the FTX collapse disrupted interconnected firms and exposed vulnerabilities in business models relying heavily on external liquidity.
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Prosecutors cite deception and prolonged investor harm
Prosecutors further argued that Jeong engaged in misleading promotional practices that encouraged users to deposit funds despite underlying financial risks, thereby increasing exposure for customers who remained unaware of the platform’s deteriorating condition.
Moreover, authorities criticized his conduct throughout the legal proceedings, describing his response as uncooperative and suggesting that his failure to take responsibility contributed to worsening the financial impact on affected investors.
At the same time, the defense has indicated a willingness to address customer losses if Jeong is acquitted, although victims have strongly urged the court to impose a strict sentence that reflects the scale of the alleged misconduct and financial damage.
Industry impact and regulatory pressure intensify
The case also involves links to Haru Invest and B&S Holdings, with reports indicating that these entities faced losses of about 350 billion won following the FTX collapse, which added further complexity to the chain of disruptions affecting Delio’s operations.
Consequently, regulators in South Korea have increased scrutiny on crypto platforms, pushing for stronger compliance standards and improved risk management practices as part of broader efforts to restore investor confidence in the digital asset sector.
The court is scheduled to deliver its first ruling on July 16, and the outcome is expected to influence how authorities approach enforcement and oversight across South Korea’s evolving crypto industry.
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