Delio CEO Denies Fraud Charges in First Trial Over Crypto Asset Scandal

The CEO of Delio, a crypto asset custody firm embroiled in controversy after halting withdrawals without prior notice, denied all charges in the first trial.

During the first hearing at the 11th Criminal Division of the Seoul Southern District Court, where Delio CEO A is facing charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, A’s defense team stated, “We deny all charges in the indictment.” The defense argued that the suspension of Delio’s crypto asset withdrawals was due to the unforeseen bankruptcy of an overseas exchange, not due to embezzlement or breach of trust by the defendant.

The defense also challenged the contents of the prosecution’s indictment. They claimed, “The indictment includes lengthy details of unrelated facts and mixes up the nature and initiation dates of Delio’s business, aiming to instill a negative prejudice against the defendant.”

According to the prosecution, from August 2021 to June 2023, A allegedly defrauded approximately 2,800 victims of around 250 billion KRW worth of crypto assets. The prosecution claims that A concealed the operational losses and hacking damages that had resulted in the loss of deposited customer coins since the early stages of the business, while falsely promoting profitability to acquire the victims’ crypto assets.

Additionally, A is accused of lending 80% of the company’s assets to another crypto asset custody firm without collateral and submitting false performance records of coin collateral loans to fraudulently secure 1 billion KRW in investment from an investment association. A also allegedly submitted an audit report that inflated the company’s coin holdings by 47.6 billion KRW to fraudulently obtain registration as a Virtual Asset Service Provider (VASP).

The next trial is scheduled for the 25th, two weeks from now. Concurrently, the first trial of the executives of Haru Invest, a crypto asset custody service that suspended withdrawals a day before Delio, is also ongoing at the same court.