South Korean FIU Imposes a 1.4 Million Dollars Fine on Crypto Lender Delio and Suspends Operations for 3 Months

Crypto News– At the beginning of the month, South Korea’s Financial Services Commission’s Financial Intelligence Unit (FIU) made a public announcement, imposing severe penalties on Delio, a prominent cryptocurrency company. These penalties encompass a three-month suspension of all business operations and a substantial fine amounting to 1.896 billion South Korean won, approximately equivalent to $1.4 million. In addition to these financial and operational sanctions, the FIU also recommended the dismissal of one of Delio’s top executives.

South Korean FIU Imposes a 1.4 Million Dollars Fine on Crypto Lender Delio and Suspends Operations for 3 Months

The sanctions were imposed following an in-depth investigation by the FIU into Delio’s adherence to South Korean financial regulations. According to the official statement, the company was found to be in violation of several obligations outlined in the Act on the Reporting and Use of Specific Financial Transaction Information.

The company breached its obligation to refrain from engaging in transactions with cryptocurrency businesses that had not reported their activities to financial authorities. The company failed to conduct proper assessments of money laundering risks associated with new products and services before their launch, constituting another significant regulatory violation. The FIU’s investigation identified shortcomings in “Know Your Customer” (KYC) procedures, which are designed to verify the identities of individuals and entities involved in financial transactions.

Furthermore, Delio did not implement adequate measures to restrict transactions falling under the purview of the Act on the Reporting and Use of Specific Financial Transaction Information, potentially creating opportunities for illicit financial activities.

The Financial Intelligence Unit (FIU) disclosed that Delio had facilitated the transfer of customers’ virtual assets to unreported foreign virtual asset operators on a total of 171 occasions. The company, registered with the FIU as a Virtual Asset Service Provider (VASP) and rectified as such, offered a virtual asset deposit service featuring an annual interest rate of up to 10.7%. However, in June, the company abruptly halted customer withdrawals. This action prompted the FIU to initiate an inspection, and the prosecution subsequently launched an investigation into the company.

The investigation has also raised concerns about Delio’s affiliate firm, Haru Invest, which suspended both withdrawals and deposits on June 13, citing complications with a “consignment operator.”