Delio CEO Faces 20 Years Over Alleged $181M Embezzlement

South Korean prosecutors are asking a court to sentence Delio CEO Jung Sang-ho to 20 years in prison, alleging he embezzled about 250 billion won ($181.5 million) in customer funds before the crypto platform froze withdrawals in June 2023 and later shut down.

Prosecutors say Jung diverted or otherwise misused customer assets while promoting Delio as a high-yield deposit platform that offered returns up to 10.7% on bitcoin, ether and other tokens. When the company halted withdrawals last summer, thousands of users were unable to access their funds. Authorities estimate more than 2,800 investors were affected.

Investigators contend a large portion of Delio’s holdings had been placed with FTX. After FTX filed for bankruptcy in late 2022, prosecutors say those assets became largely unrecoverable. They allege Delio continued to market its services without disclosing the mounting risk to customers. Haru Invest halted withdrawals in June 2023; days later Delio froze withdrawals, and the platform closed within months.

The indictment alleges Jung submitted a falsified audit report that overstated the company’s crypto holdings by tens of billions of won. Prosecutors say the report helped Delio obtain regulatory registration and build customer trust despite the company’s weakened financial position. The charges accuse Jung of misleading investors over an extended period and of intentionally concealing the true state of customer assets.

Jung denies the charges. His legal team argues losses tied to FTX’s bankruptcy and broader market volatility caused the collapse, not deliberate wrongdoing by Delio’s management.

The 20-year sentence request would rank among the longest penalties sought so far in South Korea’s digital-asset sector if a court imposes it. The case is proceeding under a regulatory backdrop that changed with the Virtual Asset User Protection Act, which took effect in 2024 and imposed stricter rules on custody, disclosures and investor protection. In a recent unrelated case, a CEO received a seven-year prison term for fraud, and prosecutors have filed charges in matters connected to the collapse of TerraUSD and Luna.

Market observers have highlighted liquidity and broader macro conditions as factors in recent crypto stress. Lyn Alden described bitcoin as ‘a global liquidity barometer.’ Investor Raoul Pal wrote that ‘Liquidity is currently the most important macro factor,’ arguing shifts in liquidity can accelerate market cycles and magnify losses.

A Seoul court will decide Jung’s sentence. Regulators, investors and other crypto firms are following the case.