Sudden Withdrawal Suspension... Investors of HaruInvest and Delio Prepare Class Action Lawsuit

Virtual Currency Deposit Service Scandal Spreads
Fraud Allegations Expected in Actual Lawsuit Dispute

Domestic cryptocurrency deposit service companies ‘Haroo Invest’ and ‘Delio’ have consecutively suspended withdrawals, facing collective lawsuits from investors. Delio, being a virtual asset operator managed by financial authorities, is expected to cause significant repercussions.

According to the legal community on the 16th, investors of Haroo Invest and Delio are confirmed to be preparing a class-action lawsuit through the law firm LKB. Previously, only Haroo Invest investors were preparing for a class-action lawsuit, but now Delio investors are also participating. As of the previous day, about 410 Haroo Invest investors and 120 Delio investors gathered in a KakaoTalk group chat to prepare for the class-action lawsuit. Lee Jung-yeop, the lead attorney at law firm LKB, said, "If investors had been able to withdraw their deposited cryptocurrencies, they would not have prepared a lawsuit," adding, "Following Haroo Invest, we are currently recruiting participants for the class-action lawsuit from Delio victims as well."

Haroo Invest and Delio operate a type of deposit service where cryptocurrencies are entrusted for a certain period and paid as interest. Haroo Invest offered high-interest products with up to 12% annual interest, while Delio provided about 10% annual interest to investors.

However, on the 13th, Haroo Invest suddenly suspended deposit and withdrawal services, citing problems with its partner cryptocurrency management company ‘B&S Holdings’. Haroo Invest plans to file a lawsuit, claiming that B&S Holdings provided false information, including falsifying management reports.

The impact spread to Delio as well. On the 14th, Delio announced on its website that withdrawals would be temporarily suspended. Delio explained that this measure was to prevent a ‘bank run’ where a large volume of cryptocurrencies or cash is withdrawn in a short period. Delio stated, "Due to the suspension of digital asset deposits and withdrawals at Haroo Invest, there has been a sharp increase in market volatility and investor confusion," adding, "We will maintain the temporary withdrawal suspension until these aftereffects are resolved."

If the class-action lawsuit is actually filed, there is a high possibility that fraud charges will be applied. The companies promised high interest rates while attracting investments, but if they do not actually hold the cryptocurrencies, such charges could be applicable. In fact, Sam Bankman-Fried, founder of the overseas cryptocurrency exchange FTX, was indicted by U.S. prosecutors on fraud charges for misappropriating customer deposits.

Delio promotes on its website that the total cumulative amount of Bitcoin (TVU) reaches 41,743 units. TVU includes both deposit and loan transaction records. Moreover, Delio is currently facing allegations of embezzlement and breach of trust within cryptocurrency communities. Haroo Invest also emphasized investment stability on its website by stating that it "manages assets directly without relying on external platforms."

Delio is expected to cause even greater repercussions. It is a virtual asset operator recognized by the state and has obtained the Information Security Management System (ISMS) certification, which is one of the conditions for registering as a virtual asset operator. In February last year, the FIU decided to accept Delio’s application for virtual asset operator registration. Virtual asset operators are managed by financial authorities under the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transactions Act). The FIU is reportedly cooperating with investigative authorities to respond to Delio’s embezzlement and breach of trust allegations.