Seoul court sentenced Delio CEO Jeong Sang-ho to 15 years for embezzling 70 billion won in customer crypto; the failed lender's liquidation is underway.
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A South Korean court sentenced Delio CEO Jeong Sang-ho to 15 years in prison for misusing about $49.2 million in customer cryptocurrency assets and submitting false documents to secure a regulatory registration.
Regional reports said the Seoul Southern District Court issued the ruling Aug. 13 and ordered Jeong detained immediately, citing a risk he could flee. Prosecutors had sought a 20-year prison term.
The court found Jeong guilty of embezzling about 70 billion won in customer assets. It also convicted him of submitting false documents when registering Delio as a virtual asset service provider, a government-recognized category for crypto businesses. An accounting firm report attached to the registration overstated Delio's coin holdings by about 47.6 billion won, or $34 million, the court said. Judges said Jeong obtained the license dishonestly and promoted services Delio lacked the capacity to provide.
Delio operated as a cryptocurrency deposit and lending company, marketing itself as a digital asset bank. Customers deposited assets such as bitcoin and ethereum in exchange for interest payments.
The company's problems became public in June 2023, when it abruptly froze withdrawals. Thousands of users lost access to assets entrusted to the platform. The suspension came during a broader crisis for crypto lending firms. Delio had placed customer assets with outside counterparties that suffered losses linked to the 2022 collapse of FTX. Haru Invest, another South Korean yield platform, also halted deposits and withdrawals around that time.
A Newsis report said Jeong was acquitted on a larger allegation involving about 250 billion won, or $175.6 million, from roughly 2,800 customers. The judges ruled that key data from a server operator had been obtained illegally. Investigators did not protect Delio's right to participate in the search or provide a list of seized items, the court said. The database and evidence derived from it were thus unusable, weakening the main prosecution case.
Prosecutors instead used separate charges involving about 1,100 victims and 70 billion won. Those formed the basis for the conviction. Jeong was also acquitted on allegations involving 41 additional victims because supporting evidence was not submitted.
South Korea moved to tighten crypto oversight after the Terra-Luna collapse in 2022 and the FTX bankruptcy. The Virtual Asset User Protection Act, which took effect in 2024, strengthened rules on custody and customer protections for platforms holding client assets.
Delio was declared insolvent in November 2024, beginning liquidation proceedings to sell assets and distribute funds to creditors. Recovery for depositors remains uncertain.
Jeong may appeal the ruling.
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