South Korean Bitcoin lender Delio is reportedly planning to file an administrative lawsuit against regulators over the misinterpretation of the law. This misunderstanding led to an investigation and a significant fine imposed on the crypto lending firm. Delio vehemently denies the allegations of fraud and embezzlement made by the Financial Service Committee (FSC), labeling them as baseless.
According to a report in a local daily, Delio claims that the regulator unreasonably implied the law in a situation where there were no clear regulations for virtual asset deposit and management products. The Financial Intelligence Unit (FIU) recommended the removal of Delio CEO Jeong Sang-ho through a sanctions announcement on September 1. Delio believes this move indicates that the financial authorities are pressuring them to shut down rather than affording them the opportunity to recover. The FIU also imposed a three-month suspension on Delio’s operations and a fine of 1.83 billion Korean won ($1.34 million).
Delio further warned that the assets seized by regulators could have disastrous consequences for their operations. Sang-ho expressed concern over the “unreasonable legal interpretation and arbitrary application” of the FIU sanctions, asserting that such behavior could have a detrimental impact on the domestic virtual asset industry.
The primary source of conflict centers around the interpretation of existing laws. It remains unclear whether a lending company that utilizes virtual assets as collateral for cash loans should be considered a virtual asset business operator. Additionally, questions arise regarding whether the act of imposing a lock-up constitutes “storage” of virtual assets under the Special Financial Services Act.
Delio argues that the current law does not clearly define virtual asset deposits and management products as financial products. Lawyers for the firm highlight the absence of provisions for virtual asset-related laws and regulations concerning the virtual asset management business. They assert that the FIU wrongly interpreted virtual asset deposits and management products as financial investment products, leading to the sanctions imposed on Delio.
This legal battle between Delio and regulators highlights the need for clearer regulations and definitions in the virtual asset industry. The outcome of this lawsuit will likely have implications for the future governance and operation of similar crypto lending firms in South Korea.
Sources:
– Bitcoin price on CoinTelegraph
– Delio under investigation on CoinTelegraph
– Report on Sedaily.com
– Article on Naver.com
– Home loans using crypto as collateral on CoinTelegraph
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About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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