South Korea’s Seoul Southern District Court has sentenced Delio CEO Jeong Sang-ho to 15 years in prison for defrauding customers of approximately $49.2 million in crypto assets. The court, presiding under Judge Jang Chan, delivered the verdict on August 13 and ordered Sang-ho’s detention over flight risk concerns. Prosecutors had initially sought a 20-year term, but the court excluded key evidence after ruling that the search and seizure of outsourcing company Gabia’s server was unlawful. The case stems from Delio’s collapse after it placed customer deposits with yield platform Haru Invest, which suspended withdrawals in June 2023, triggering a liquidity crisis.
The Seoul Southern District Court’s 11th Criminal Division sentenced Jeong Sang-ho to 15 years in prison on August 13 for fraud involving nearly 70 billion Korean won ($49.2 million) in customer crypto assets. The court also ordered his detention due to concerns that he could flee.
Prosecutors had initially sought a 20-year prison term. The court rejected some evidence after accepting arguments that the search and seizure of outsourcing company Gabia‘s server was conducted unlawfully.
Prosecutors failed to guarantee Delio’s right to participate in the search and did not provide a list of seized items, as stated, which rendered the company’s database information and related secondary evidence inadmissible.
The court stated, “The defendant committed a crime of embezzling a large amount of money from numerous victims… the nature of the offense is very serious.” The court acknowledged that external factors contributed to the case and noted that Sang-ho had no prior criminal record involving a punishment greater than a fine.
The original case alleged fraud involving approximately $176 million and around 2,800 customers. After excluding evidence, the court found Sang-ho guilty under an alternative indictment involving $49.2 million and over 1,078 victims.
Delio offered high returns on cryptocurrency deposits and promoted itself as a digital asset bank. Its collapse was closely linked to the downfall of crypto yield platform Haru Invest.
Delio had placed a portion of customer assets with Haru to generate returns. This left the lender exposed when Haru abruptly suspended withdrawals in June 2023 after citing problems involving its service provider, B&S Holdings.
Delio halted withdrawals shortly afterward, triggering a liquidity crisis that ultimately contributed to its bankruptcy.
