Delio, a South Korean company providing virtual asset deposit services, has declared plans to form a new corporation aimed at transferring its debts amidst allegations of embezzlement. According to a recent report from the Chosun Daily, Delio intends to establish a fresh entity to take over its financial obligations. This move is part of efforts to sell its current business in order to reimburse creditors, following a scandal involving accusations of embezzling virtual assets valued at $180 million (250 billion won).
250 Billion Won Embezzlement Scandal
Delio initially attracted investments by promising annual returns of about 10% on deposits of cryptocurrencies such as Bitcoin and Ethereum. However, in June 2023, the company abruptly ceased its operations without prior notice, resulting in substantial financial losses for its investors.
The sudden suspension sparked controversy, with allegations of fraud and embezzlement directed at Delio’s CEO, Jung Sang-ho. Jung was accused of misappropriating approximately 250 billion won from around 2,800 investors between August 2021 and June 2023.
Legal troubles escalated further when Jung was indicted for fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and for violating the Specific Financial Information Act. Although Jung managed to evade arrest, the ongoing trial has significantly impacted the company’s operations and its standing in the industry.
Company Reveals Debt Transfer Plan
Today, Delio announced its strategy to transfer its debt to a newly formed corporation. The company plans to establish this entity specifically to absorb all existing bonds and liabilities, effectively segregating its debt from its ongoing operations.
“We will create a new corporation and transfer all of Delio’s bonds and liabilities to this entity,” the company stated. “Delio itself, free of debt, will then be sold to a company in need of a Virtual Asset Service Provider (VASP), with the proceeds from the sale directed to the newly established corporation that has assumed the debt.”
According to the report, Delio views this plan as feasible and anticipates the potential acquisition to be finalized as early as July 2024.