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ArticlesHow Investors Should Respond to the Haru Invest and Delio Incidents
In June 2023, Haru Invest and Delio, two prominent virtual asset management service providers, suspended deposit and withdrawal operations following alleged financial mishandlings. These events raise significant concerns for investors, and proactive measures are necessary to safeguard their interests. Background of the Incidents Haru Invest: Operated by pooling customer assets into funds managed externally. It attributed its collapse to fraudulent reporting by B&S Holdings, one of its external fund managers. Delio: Similar operational model, potentially linked to Haru Invest through shared fund management practices. This connection suggests possible interrelated failures between the two companies. These issues have placed both companies in legal jeopardy, with the potential for criminal and civil lawsuits, including allegations of fraud, embezzlement, and breaches of contract. Key Investor Actions 1. Document and Preserve Transaction Records Why: In the event of legal proceedings, proof of claims is crucial. How: Capture screenshots of all transaction history, account details, and balances from Haru Invest and associated platforms. Secure this data against potential hacking or account deletion. 2. Consider Civil and Criminal Actions Criminal Complaints: Investors can collectively file complaints for fraud or mismanagement. Civil Lawsuits: Pursue claims for damages or asset recovery. Be aware that, as non-financial institutions, Haru Invest and Delio are unlikely to benefit from state interventions. 3. Seek Preservation Orders Rationale: Virtual assets can be easily hidden or transferred, necessitating swift action to secure remaining funds. Steps: Petition the court for seizure or freezing orders against virtual assets held at domestic or international exchanges linked to the companies. 4. Monitor Developments and Collaborate Stay Informed: Track updates in both criminal and insolvency proceedings. Collaborate: Work with experts or align with other affected investors to share resources and enhance leverage. 5. Consider Liquidating Other Assets Why: The interconnected nature of financial mishandlings could cause broader ripple effects in the virtual asset market. Action: Minimize exposure by converting holdings into fiat currency, especially in centralized exchanges, until regulatory and market stability improves. Broader Implications and Legal Recourse Both Haru Invest and Delio are likely to face bankruptcy or restructuring procedures. Investors should: Engage in Bankruptcy Proceedings: File claims to participate in the asset distribution process. Monitor Prosecutorial Actions: Collaboration between bankruptcy trustees and criminal investigators is crucial for asset recovery.
2023-06-16 블록미디어(BLOCKMEDIA) -
Media Coverage
Haru Invest and Delio investors launch a 'class-action lawsuit.'
On the 13th, Haru Invest, a leading domestic virtual asset (cryptocurrency) management company, abruptly suspended deposits and withdrawals of investor assets and shut down its office. The following day, on the 14th, Delio, regarded as the top virtual asset management company in Korea, announced a suspension of deposits and withdrawals, citing the fallout from the Haru Invest crisis. (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "Although Delio's asset management methods and entities are not yet fully disclosed, it seems likely that Delio entrusted customer assets to Haru Invest, which in turn handed them over to B&S Holdings for management, where the issue may have occurred." The sudden suspension of deposits and withdrawals has left investors in a state of panic. They trusted the high interest rates of over 10% and deposited their virtual assets, but now they find themselves unable to recover not just the interest but even the principal. Attorney Hyeonsu “Elliot” Jin advised that investors should consider both civil and criminal legal actions. He said, "Given the large number of victims and the substantial amount involved, investors should collectively file criminal complaints and civil lawsuits to protect their assets." Additionally, he suggested that, depending on the nature of the contracts between the companies and investors, civil actions such as claims for the return of virtual assets and compensation for damages should also be considered. Attorney Jin explained, "Before embarking on long civil lawsuits and compulsory execution processes, there may be grounds to request an injunction to prevent the disposal of virtual assets or to freeze virtual asset claims." He also mentioned, "Haru Invest and Delio may file for corporate bankruptcy or rehabilitation due to insolvency and inability to meet obligations. If that happens, the court will review and investigate the company's remaining assets, convert them into cash, and distribute the proceeds to creditors. Creditors should be prepared by filing claims in advance." He emphasized, "It's important to capture account information, details of virtual asset holdings, and transaction records from Haru Invest and Delio in advance to prove your status as a creditor. Capturing all transaction details, including deposit and withdrawal histories, is also a good practice." He further advised, "For the time being, it’s wise to convert virtual assets into cash. Financial incidents tend to have a domino effect. Given the recent market turmoil caused by the U.S. SEC's regulation of virtual assets, it’s recommended to withdraw funds from centralized exchanges to avoid additional losses until the situation stabilizes."
2023-06-16 Korea Economy -
Media Coverage
The lawsuit against Haru Invest and Delio, following their 'withdrawal suspension,' expands overseas.
Legal action by investors related to the withdrawal suspension of Haru Invest and Delio is expected to expand beyond domestic investors to include foreign investors as well. Decent Law Firm, a law firm specializing in virtual assets and startups, is preparing a collective legal response for foreign investors affected by the Haru Invest and Delio crisis. According to the virtual asset (cryptocurrency) industry on the 16th, Decent Law Firm announced through social media the day before, "We have gathered to represent Haru Invest and Delio users who wish to recover their assets through legal procedures," adding, "Regardless of whether you reside in Korea, you can participate in individual or group lawsuits or seek redress through a collective lawsuit." Decent Law Firm, founded last year, provides specialized legal services in the digital asset sector, including virtual assets, NFTs (non-fungible tokens), tokens, fractional investments, asset management, and exchanges. Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "After posting the announcement last night, we received many inquiries and applications by early morning." He further explained, "Around 10 people from countries like Australia, France, Canada, and the United States have contacted us directly through our website, email, and Telegram." Jin added, "One of the investors mentioned they had invested about 7 billion KRW (approximately 22 Bitcoins)." Most of the inquiries received by Decent Law Firm so far are from investors related to Haru Invest. Jin said, "Most of the inquiries have been regarding Haru Invest," and noted, "While Delio seems to have many domestic investors and institutional investors, Haru Invest appears to have a significant number of foreign investors as well." Haru Invest is a virtual asset management company established by the domestic blockchain accelerator Blockcrafters. The company is registered in Singapore and has a Korean branch, Haru Invest Korea. According to its website, Haru Invest has secured over 80,000 members from 140 countries. Jin added, "We will need to keep an eye on the situation," and further mentioned, "We will serve as a communication channel for foreign investors who are not aware of the ongoing situation in Korea."
2023-06-16 MONEY TODAY -
Media Coverage
Haru Invest and Delio, which suspended coin withdrawals, have been sued on fraud charges.
Haru Invest and Delio, companies that operate virtual asset deposit services and have halted customer withdrawals, have been sued by users on charges of fraud, among other allegations. (omitted) Criminal complaints and civil lawsuits are expected to follow this situation. Some domestic users are also preparing to file lawsuits through other law firms. Additionally, since Haru Invest is based in Singapore and provides global services, overseas users are also preparing legal action. Decent Law Firm, a law firm specializing in virtual assets, is gathering participants for a lawsuit through channels such as Twitter and Telegram, regardless of whether they reside in Korea. Industry experts estimate that the total damages from this incident could reach between 300 billion and 400 billion KRW.
2023-06-16 edaily -
Media Coverage
Virtual asset deposit services face a crisis of mass bankruptcies.
Companies offering so-called 'virtual asset deposit' services, which pay interest by managing deposited virtual assets, are on the brink of collapse, raising alarms. The problem is that it's difficult to pinpoint the cause of this crisis. The virtual asset industry is tense, fearing that the aftermath of this situation could lead to a wave of bankruptcies across the domestic virtual asset market, potentially ushering in a dark period. (omitted) Legal experts point out that users of virtual asset deposit services are at high risk of losing their principal due to the current crisis. Haru Invest, the company at the center of this issue, operates through a foreign entity and is an unregistered business in Korea, meaning it is not under the jurisdiction of the government or financial authorities. Pureun “Ian” Hong, managing partner at Decent Law Firm, stated, "Companies like Haru Invest, which offer virtual asset deposit services, are essentially operated by Koreans domestically but have established foreign entities to avoid government regulation and oversight. While they've exploited this regulatory blind spot, the risks have been borne entirely by the investors," criticizing the situation.
2023-06-15 biz.chosun -
Media Coverage
KakaoTalk neglects misleading banner ads with exaggerated profit claims.
With approximately 41.45 million active users in May, KakaoTalk is indiscriminately attracting gambling-like advertisements to generate banner ad revenue. Particularly, exaggerated advertisements from services like "Random Box" on the Wooju Market suggest that consumers could win luxury items, which calls for special caution from users. (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "Advertising products that are not actually provided as if they can be won through a random box, or omitting negative customer reviews and fabricating false 'satisfied' reviews, violates the Act on the Consumer Protection in Electronic Commerce. This requires caution." Advertising that exaggerates the features of a product to boost sales is considered misleading, and advertisements using information that is not factual are classified as false advertising.
2023-06-12 NBN NEWS
