Crypto Lending Firm Delio Faces Regulatory Sanctions for Compliance Failures in South Korea
Luisa Crawford Sep 02, 2023 03:30
South Korean crypto asset management firm Delio has been fined KRW 1.896 billion and suspended for three months by the Financial Services Commission's Financial Intelligence Unit due to non-compliance with financial transaction laws.
Delio, a South Korean crypto asset management firm holding dual licenses as a Virtual Asset Service Provider (VASP) in Korea and a Money Services Business (MSB) in the U.S., has been hit with a three-month business suspension and a fine of KRW 1.896 billion (approximately $1.6 million USD) by the Financial Services Commission's Financial Intelligence Unit (FIU). The regulatory body announced the punitive measures on September 1, citing multiple violations of financial transaction laws.
Regulatory Scrutiny
The FIU stated that Delio failed to comply with various obligations under the Act on Reporting and Using Specified Financial Transaction Information. Specifically, the firm neglected to report transactions with unregistered virtual asset service providers (VASPs), failed to assess money laundering risks before launching new products and services, and did not fulfill customer verification requirements. According to the FIU, "Delio supported the transfer of customer assets to unreported foreign virtual asset service providers 171 times and also supported the storage activities of these unreported VASPs."
Operational Impact
Despite its regulatory credentials, Delio recently halted customer withdrawals, raising questions about its operational integrity. The company had been offering virtual asset deposit services with annual interest rates of up to 10.7%. However, the firm abruptly halted customer withdrawals in June, prompting an investigation by the FIU and subsequent legal action.
Image source: Shutterstock