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Media CoverageHow to Respond to the 'Withdrawal Suspension' Crisis of Delio and Haru Invest
Host: Director Han Chi-ho Guest: Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm Q. What is the Delio and Haru Invest incident? The suspension of virtual asset deposits by Haru Invest and Delio is causing a widespread impact. Haru Invest operated a virtual asset deposit service. Haru Invest is in a state of over-indebtedness or insolvency. Delio generated profits through the management of customer assets. After suspending withdrawals, Delio held meetings with users, but the extent of the losses has not been disclosed. Q. What are the legal perspectives on Delio and Haru Invest's 'withdrawal suspension'? 100 investors have filed fraud charges under the Special Economic Crimes Act, claiming it involved "financial investment products subject to the Capital Markets Act." Contractual breaches between the companies and investors could lead to compensation for damages. Preservation measures, such as provisional injunctions to prohibit the disposal of virtual assets, are expected due to the inability to dispose of assets freely. Delio and Haru Invest may apply for corporate bankruptcy or rehabilitation procedures. Q. What are the measures for victims of the Delio and Haru Invest incident? Capture all databases, including virtual asset deposit and withdrawal records. Consider both civil and criminal actions. Consider preservation measures. Monitor the progress of the case closely. Liquidate virtual assets into cash. Q. Is there national responsibility for the Delio and Haru Invest incident? Virtual assets lack sufficient legal protection. "Victims of Delio and Haru Invest are not receiving national protection." "In Korea, when issues related to virtual assets arise, the state avoids responsibility." A representative from the Financial Services Commission stated, "Delio's investment method is not under our jurisdiction." The Financial Services Commission needs to actively manage and supervise the situation.
2023-06-26 NBN NEWS -
Media Coverage
Haru Invest, false and exaggerated stock advertising tactics.
Haru Invest and Delio, virtual asset deposit services that suddenly suspended withdrawals, were effectively in a ‘regulatory blind spot’. The process of attracting investors mirrored the false or exaggerated advertising seen in capital markets, yet there were no regulations addressing this. Particularly, Haru Invest, an unlicensed business operating without proper registration in Korea, was left in a complete regulatory void. (omitted) The 'referral' system, a typical method used by unlicensed virtual asset exchanges in Korea to attract investors, was also employed. Referral marketing involves offering various benefits, such as fee discounts, when entering a referral code provided by cryptocurrency YouTubers and influencers. These YouTubers and influencers were reportedly paid a commission for each referral. There are claims within the industry that some YouTubers earned tens to hundreds of billions of won in referral fees when the market was booming. Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm stated, "Although the specifics of how referrals are conducted may vary, if they were actively promoted without disclosing the risks of the exchange, it could lead to criminal fraud charges or civil liability for damages due to illegal activities, so caution is necessary."
2023-06-23 etoday -
Media Coverage
Haru Invest, which suspended withdrawals, is suspected of establishing an overseas entity to avoid regulations.
As Haru Invest, a virtual asset deposit service provider, faces bankruptcy and becomes embroiled in fraud allegations, suspicions have arisen that the company established an overseas entity to evade domestic regulations. Additionally, after the service suspension, key executives went into hiding, leading to criticism from investors that this may have been a deliberate fraud. (omitted) The sudden suspension of deposit and withdrawal services by Haru Invest has intensified suspicions that Haru Invest and Blockcrafters may have intentionally engaged in fraudulent activities. While Delio, facing similar issues, has taken measures such as meeting with investors and issuing statements, Haru Invest has remained silent, fueling further concerns. The class-action lawsuit filed by Decent Law Firm on the 20th at the Seoul Central District Prosecutors' Office targets not only Haru Invest’s executives but also the executives, auditors, and management team employees involved in the operations of Blockcrafters. Decent explained that the inclusion of Blockcrafters' executives in the lawsuit is aimed at uncovering the exact cause of the Haru Invest crisis and understanding the previously unclear relationship between the two companies. One of the key issues in this lawsuit is the suspicion that Haru Invest may have improperly obtained information from Blockcrafters' accelerator (AC) business. Additionally, there are allegations that Haru Invest might have used this information to promise returns of over 10% annually, which is expected to be a focal point in the lawsuit. Pureun “Ian” Hong, managing partner at Decent Law Firm, stated, “The fact that Haru Invest and Blockcrafters share the same internal directors and office space is evidence that they are essentially the same company. There is also the possibility that sensitive information from projects Blockcrafters gained through its virtual asset investment processes, such as corporate presentation materials, may have been leaked to Haru Invest.”
2023-06-21 biz.chosun -
Media Coverage
Why is Haru Invest involved in a 'rug pull' controversy?
Host: Reporter Jang Se-jin Guest: Pureun “Ian” Hong, managing partner at Decent Law Firm Q. Why did Haru Invest suspend deposits and withdrawals? Haru Invest offers a virtual asset deposit service. On the 13th, it temporarily suspended deposit and withdrawal services, stating "issues with a partner company." Q. What is the current situation with Haru Invest? Haru Invest announced that "a problem occurred with a partner company," but did not disclose the name of the partner. "Investor anxiety is increasing." Q. How does Haru Invest operate virtual asset management? Haru Invest offers high annual interest rates when investors deposit coins. It guarantees fixed profits to investors. Q. Why does Haru Invest guarantee fixed profits? Haru Invest promised a 12% interest rate for Bitcoin deposits. Q. Is guaranteeing high fixed returns legally problematic? If virtual assets are managed in various ways, high returns are possible. However, if there are losses in the management of deposited assets, paying the promised interest becomes impossible. Haru Invest offers significantly higher interest rates compared to traditional financial institutions. Q. Is it possible for Haru Invest to guarantee such high fixed returns? Haru Invest conducts arbitrage trading using partner companies. Q. Is Haru Invest involved in a 'rug pull' controversy, and is there suspicion of a Ponzi scheme? If Haru Invest uses funds from new investors to pay interest, it would be considered a Ponzi scheme. Q. What is the Merge Point incident? The sale of Merge Money at a 20% discount was halted, leading to fraud charges. In the first trial, the court sentenced the defendants to 4 and 8 years in prison for embezzling funds for personal use. Merge Point's CEO, Jinhee Kwon, passed away, and the court dismissed the charges. Haru Invest is now being compared to the Merge Point scandal. Q. How can Ponzi schemes be identified? Coupang, with its rocket delivery service, reduced deficits for the first time in history. Tesla overcame capital erosion and is currently experiencing its longest rally. Understanding the business’s revenue structure and vision is crucial in distinguishing a Ponzi scheme. "The basic principle is High Risk, High Return."
2023-06-19 NBN NEWS -
Articles
How 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