An official announcement from Delio, the leading crypto asset lender in South Korea, announced on Thursday plans to suspend withdrawals. The Delio report stated the decision to freeze withdrawal aimed to safeguard the customer’s assets.
On June 14, the Delio group notified the customers that the crypto firm would temporarily halt withdrawal services. The notice stated that the current market volatility that has sparked mixed thoughts among the crypto entrepreneurs prompted the firm to suspend withdrawals.
In their report, the Delio team pledged to protect the customer’s assets from exploitation. The Delio team plans to analyze the situation in the crypto sector to gain an in-depth understanding of the behavior of the market.
Why Did Delio Suspend Withdrawal?
Meanwhile, the Delio group plans to keep the community updated on the measure that will be taken to safeguard the customer’s assets. Surprisingly Delio’s latest action mirrors Haru’s withdrawal suspension, which has affected over 80000 customers.
On June 13, the prominent crypto earns protocol in South Korea, Haru, suspended withdrawal services. The Haru group confessed to having undisputed differences with one of the core service partners.
In their update, the Haru team plans to pursue a practical way to resolve the competing interest with its partners. According to Haru, assets worth $1 billion remain under management custodial.
On the contrary, the Delio team confirmed that around 41743 Bitcoin, equivalent to $1.1 billion, 118083 Ether which amounts to $206 million, and altcoins worth $8.1 million, would be under management.
Haru and Delio Suspends Withdrawals
A close examination of the operation of Delio and Haru revealed both firms provided crypto-saving services with a return of around 10% APY. However, some crypto-saving products Haru offers have a higher return of approximately 50% APY.
Reportedly market critics argued that the suspension of Haru will create a prolonged ripple effect that will affect the operation of other crypto firms. In an interview with Heralds Kyungjae, the chief executive of Delio, Jeong Sang-ho, confirmed that some of the firm’s assets were invested in the Haru saving portfolios.
Sang-ho withheld the information concerning amount of customers’ assets currently saved on the Haru platform. He stated that Delio’s withdrawal suspension was the aftermath of Haru’s latest move. Mr. Sang-ho assured the Delio community that the crypto firms would prioritize resolving the situation.
In the bankruptcy filing, the embattled lenders lamented that the prolonged crypto winter weakened their financial health, undermining their ability to pay the creditors.
Factor that Contributed to Suspension of Withdrawal
A few days ago, Haru was accused of attempting to engage in a rug pull. A rug pull is a crypto scam involving deceptive marketing to attract a large audience with the aim of heisting customers’ assets. It was reported that some of Haru customers found the offices deserted.
Commenting on the claims, the Haru executives confessed that they were instructed to shut down the offices to work remotely. The suspension of Haru and Delio’s withdrawal has prompted Upbit, the largest crypto exchange in South Korea, to freeze all withdrawals linked to Delio’s wallets.
The Upbit team confessed that the decision to withdraw its services on the Delio platform aimed to safeguard the investors. In January, the South Korean market regulators imposed strict rules to ensure the crypto firms fully comply with the virtual assets service provider regulations.
Based on South Korean regulations, the regulators have categorized the VASP license into two. The first VASP is issued to crypto exchanges and wallet service providers who work closely with a reliable banking partner to offer crypto and fiat trading services. The second type of VASP allows crypto firms to engage in crypto transactions only.
As of this publication, at the initial registration for the VASP permit, the Haru team claimed to offer crypto services to global customers. Per the paperwork submitted by Haru, it was reported that the regulators failed to issue the permit to the crypto firm.
Elsewhere the new legislative regime in North America has undermined the operations of crypto lenders. In January, the US Securities and exchange commission filed a lawsuit against Nexo for offering unregistered securities. Following the SEC charges, Nexo was forced to settle a court fine of $45 million.
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