Delio to Sue South Korean Authorities
- Delio claims that the sanctions on its operations could affect the broader crypto community in South Korea.
- Crypto activities have surged in South Korea, but the lack of clear rules remains a hindrance to growth.
- Coinbase CEO Brian Armstrong recently urged crypto companies to seek court action and set a legal precedent.
South Korean crypto lending platform Delio is reportedly set to file an administrative lawsuit against regulatory agencies for wrongly interpreting the law, leading to a huge fine against the company.
Although the use of cryptocurrencies and other digital assets has increased in South Korea, the lack of clear-cut rules has been a bone of contention. There’s little clarity on the laws governing how crypto assets are handled by cash lending and borrowing platforms. Delio questions if cryptocurrency assets could be regarded as financial products.
Local reports revealed that South Korea’s Financial Intelligence Unit (FIU) proposed that Delio CEO Jeong Sang-ho be fired. Delio claimed this was an obvious indication that the financial authorities were pressuring it to shut down. In addition, the FIU handed Delio a three-month ban as well as a $1.34 million fine (1.83 billion Korean won).
Furthermore, the crypto lender claims that the assets confiscated by authorities would jeopardize its business operations. Jeong Sang-ho, Delio CEO, warned that the impact of these penalties could affect South Korea’s crypto community, especially in the absence of clear policies.
The main point of disagreement with South Korean authorities concerns how the law should be interpreted, primarily if a lending company that provides cash loans secured by digital assets should be treated as a virtual asset business operator. In addition, there are also varying opinions on how companies should report stake programs under the Private Financial Services Act.
Delio’s plans to sue South Korean regulators came shortly after Coinbase CEO Brian Armstrong urged DeFi protocols to seek legal action against regulators. Armstrong, whose company, Coinbase, has been at loggerheads with the SEC, has been vocal about how crypto companies are treated.
Crypto companies have come under closer scrutiny from US regulatory agencies in recent months. Regulators such as the US Securities and Exchange Commission and the United States Commodities and Futures Trading Commission have targeted prominent firms like Coinbase and Binance. The SEC accused Binance of offering unregistered securities. Binance denied this claim and expressed plans to defend itself in court.