Complaint filed against two crypto lenders for fraud

Neon dice show crypto symbols against a candlestick chart screen. [SHUTTERSTOCK]

Investors have filed a complaint against two crypto lenders — Haru Invest and Delio — over alleged fraud.

Law firm LKB & Partners filed the complaint against executives at Haru Invest and Delio with the Seoul Southern District Prosecutors’ Office on Friday, representing around a hundred clients who claim to have suffered losses when the platforms suspended withdrawals last week.

Among the accused are Haru Invest CEO Lee Hyung-soo and Delio CEO Jung Sang-ho.

The victims claim a total of around 50 billion won ($39 million) in damages.

Singapore-headquartered Haru Invest and Seoul-based Delio advertise double-digit yields for investors who lend crypto on the platforms. They provided annual percentage yields of up to 12 percent and 10 percent, respectively.

The two platforms abruptly halted customer withdrawals last week.

Haru Invest said the decision was made because a consignment operator, B&S Holdings, allegedly provided falsified management reports.

Haru Invest invests customer assets with asset management partners and provides interest to the customers in return. However, they ran out of funds to return after B&S Holdings reported a loss in asset operations.

Delio followed with a withdrawal suspension of its own, citing market volatility caused by Haru Invest’s decision.

Delio tweeted on Thursday it would temporarily suspend withdrawals “until the resolution of the current situation and its subsequent consequences.”

The crypto platforms “are unable to return customer assets because of their risky investments and asset management,” said an attorney at LKB & Partners.

“The deposit service of the two businesses is practically a financial investment product, except it was done in virtual assets. Whether such investment products should be subjected to the Capital Markets Act needs to be reviewed,” he added.

BY JIN MIN-JI [jin.minji@joongang.co.kr]