Delio, a South Korean virtual asset deposit services company, has announced the formation of a new corporation to facilitate the transfer of debt in response to embezzlement allegations.
In the wake of a controversy involving the alleged embezzlement of $180 million (250 billion won) in virtual assets, Delio has declared its intention to establish a new entity to assume its debts and sell its existing corporation to repay creditors, according to a recent report by the Chosun Daily.
250 Billion Won Embezzlement Scandal
The company, Delio, initially enticed investors by promising returns of approximately 10% per year on deposits of cryptocurrencies such as Bitcoin and Ethereum.
In June 2023, the company unexpectedly discontinued services without prior notification, resulting in substantial financial losses for its investors.
The suspension sparked a controversy, with Delio’s CEO, Jung Sang-ho, accused of embezzlement and fraud. Jung was alleged to have misappropriated approximately 250 billion won from approximately 2,800 investors between August 2021 and June 2023.
Jung’s indictment for fraud and violating the Specific Financial Information Act under the Act on the Aggravated Punishment of Specific Economic Crimes worsened his legal issues.
The ongoing prosecution affected the company’s operations and reputation despite Jung’s avoidance of arrest.
Company Reveals Debt Transfer Plan
Today (June 20), Delio disclosed its intention to transfer debt to a newly established corporation. The company plans to establish this new entity to assume all bonds and liabilities, effectively segregating its debt from its current operations.
Delio, which is debt-free, will be sold to a company needing a VASP, and the sale proceeds will be transferred to a new corporation that has assumed the debt.
The company stated, “We will establish a new corporation and transfer all of Delio’s bonds and liabilities to the new corporation.”
The report suggested that the company believes the plan is feasible and anticipates that the potential acquisition will occur by July 2024.
