South Korean Bitcoin lender Delio is gearing up to file an administrative lawsuit against the country’s Financial Service Committee (FSC). The firm contends that the FSC’s allegations of fraud and embezzlement are unfounded and stem from a flawed interpretation of existing laws. Delio argues that the regulatory body has acted unreasonably.
The Financial Intelligence Unit (FIU), a subsidiary of the FSC, had earlier recommended the removal of Delio’s CEO, Jeong Sang-ho, and imposed a three-month business suspension along with a fine of 1.83 billion Korean won (approximately $1.34 million).
According to local reports, Delio claims that these actions are indicative of the financial authorities’ intent to shut down the firm rather than allow it to rectify its operations.
The stakes for Delio and the crypto industry
The lawsuit comes at a critical juncture for Delio, as the FIU’s sanctions and asset seizures could jeopardize the company’s ongoing operations. CEO Jeong Sang-ho expressed concerns that such actions by financial authorities could potentially “kill the domestic virtual asset industry.”
The primary point of contention lies in the interpretation of existing laws, particularly whether lending companies that use digital currencies as collateral fall under the category of virtual asset business operators.
The case also highlights the broader issue of regulatory ambiguity in the crypto space. Delio’s legal team points out that there are no specific provisions in the current law that define virtual asset deposits and management products as financial products. They argue that the FIU has arbitrarily classified these as financial investment products, which they believe is a misinterpretation of the law.
Delio’s impending lawsuit against the FSC and FIU could become a landmark case in the crypto industry, especially in South Korea.