A Seoul court sentenced Delio CEO Jeong Sang-ho to 15 years for defrauding 1,078 customers of 70 billion won. A disputed search warrant slashed the original 250 billion won claim. The case lands as South Korea tightens crypto registration rules and probes Bithumb withdrawal delays.
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A Seoul court sentenced Delio chief executive Jeong Sang-ho to 15 years in prison for virtual-asset deposit fraud. The 11th Criminal Division of the Seoul Southern District Court convicted Jeong under the Act on Aggravated Punishment of Specific Economic Crimes, prosecutors said.
Prosecutors had originally sought 20 years and accused Jeong of defrauding roughly 2,800 customers of about 250 billion won ($175 million). The court convicted him on about 70 billion won taken from 1,078 victims. The gap reflects an evidence dispute.
Jeong's lawyers argued at last month's final hearing that the prosecution's search and seizure had been unlawful. The court agreed. Investigators handed Delio no seizure list even though the company owned the server database at issue, the ruling said. The court ruled the seized electronic data and any evidence derived from it inadmissible.
Delio took Bitcoin and Ethereum deposits and paid interest, advertising guaranteed annual returns near 10% and branding itself a "crypto bank." The court found the marketing was dishonest about the product's safety. Delio assured depositors it earned money through arbitrage and coin-collateralized lending while hiding early business deficits and operating losses.
The court also found Jeong submitted falsified loan records worth 2 billion won to siphon roughly 1 billion won from an investment fund. He inflated the firm's coin holdings by 47.6 billion won in an audit report used to complete its virtual-asset business registration, the ruling said.
Despite the reduced amount, Jeong's crime was described as severe. Many victims petitioned for a heavy sentence, faulting him for consistently trying to push blame onto other companies, local media reported.
The sentencing comes roughly three years and two months after Delio abruptly froze customer withdrawals in June 2023. At that time, the platform was one of South Korea's largest crypto deposit platforms.
The case arrives as South Korea tightens registration rules for virtual-asset service providers (VASP). Lawmakers recently cleared a rule change that eliminates the 1 million won reporting threshold for crypto transfers and adds financial-health tests for exchange operators, Cryptopolitan reported.
From August 20, controlling shareholders of VASPs will face a vetting system based on legal history and financial standing. Operators must keep adequate anti-money-laundering staff and give 30 days' notice before ownership changes. New entrants need a debt-to-equity ratio at or below 200%.
The Financial Supervisory Service also said it plans an on-site visit to Bithumb after altcoin withdrawals at the exchange were delayed more than 13 hours. Bithumb blamed the delays on a temporary surge in requests that outstripped its hot-wallet balance. It denied any actual shortfall.
The new VASP registration provisions take effect August 20.
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