South Korea’s Seoul Southern District Court has sentenced Delio CEO Jeong Sang-ho to 15 years in prison after finding him guilty of fraud involving nearly 70 billion Korean won ($49.2 million) in customer crypto assets. The 11th Criminal Division, presided over by Judge Jang Chan, handed down the sentence on August 13.

The court also ordered Sang-ho to be detained due to concerns that he could flee.

15 Years Behind Bars

The prosecution had initially sought a 20-year prison term, but the court rejected some of the prosecution’s evidence after accepting arguments from Sang-ho’s side that the search and seizure of the server of outsourcing company Gabia was conducted unlawfully.

According to the court, prosecutors failed to guarantee Delio’s right to participate in the search and did not provide a list of seized items, which rendered the company’s database information and related secondary evidence inadmissible.

Upon sentencing, the court stated,

“The defendant committed a crime of embezzling a large amount of money from numerous victims, and considering the circumstances and details of the crime, the means and methods used, and the scale of the damage, the nature of the offense is very serious. He has not received forgiveness from the victims who suffered serious economic losses as a result of this case.”

At the same time, the court acknowledged that external factors had contributed to the case and noted that Sang-ho did not have a prior criminal record involving a punishment greater than a fine. The ruling represented a significant reduction from the prosecution’s original case, which alleged fraud involving approximately 250 billion won (worth around $176 million) and around 2,800 customers.

After excluding evidence related to the larger allegation, the court instead found Sang-ho guilty under the prosecution’s alternative indictment involving approximately 70 billion won and over 1,078 victims.

Crisis Linked to Haru

Delio used to offer high returns on cryptocurrency deposits and promoted itself as a digital asset bank. Its subsequent collapse was closely linked to the downfall of crypto yield platform Haru Invest. Delio had reportedly placed a portion of customer assets with Haru to generate returns, which left the South Korean lender exposed when the latter abruptly suspended withdrawals in June 2023 after citing problems involving its service provider, B&S Holdings.

This forced Delio to halt withdrawals shortly afterward, which ended up triggering a liquidity crisis that ultimately contributed to its bankruptcy.

Source: CryptoPotato