Summary

  • A court in Seoul has sentenced Jeong Sang-ho, the CEO of Delio, to 15 years in prison for fraud and for falsely registering as a virtual asset service provider, as reported by local media.
  • The court determined that evidence from Delio's server host was improperly obtained, leading to the dismissal of the primary charge involving 2,800 victims and 250 billion won.
  • Jeong was instead convicted on alternative charges involving around 1,100 victims and 70 billion won, equivalent to approximately $49 million.

The Seoul Southern District Court has sentenced Jeong Sang-ho, the head of Delio, to 15 years behind bars due to the downfall of the South Korean cryptocurrency deposit platform. This sentence is five years less than what prosecutors had requested. The ruling was delivered by Judge Jang Chan in Criminal Division 11 on Thursday, as reported by the local news outlet Newsis. The court only partially upheld the original prosecution case and convicted Jeong primarily on a set of alternative charges.

The rationale for this decision was procedural. Jeong's defense argued that the search and seizure conducted at Gabia, the company hosting Delio’s servers, was illegal, a claim the court supported. It found that prosecutors failed to ensure Delio's right to be present during the search and did not provide a list of seized materials, leading to the conclusion that the platform's database and related evidence were not admissible.

This decision significantly weakened the indictment, which had accused Jeong of defrauding about 2,800 individuals of approximately 250 billion won, or about $176 million, in cryptocurrency between August 2021 and June 2023. The remaining case involved about 1,100 victims and around 70 billion won, or $49 million, which prosecutors had included as a backup after the evidence was contested. Jeong was found not guilty concerning 41 additional victims due to a lack of evidence.

Additionally, he was found guilty of fraudulently registering Delio as a virtual asset service provider using a falsified report from an accounting firm that inflated its cryptocurrency holdings by about 47.6 billion won (around $34 million).

Court Findings

The court stated that Jeong acquired his license through dishonest means and misappropriated more than 70 billion won from clients. It noted that he promoted Delio as a cryptocurrency bank despite lacking the ability to operate it effectively and attempted to evade responsibility by attributing the failure to bankruptcy.

In mitigation, the court acknowledged that external factors contributed to the platform's collapse and noted that Jeong had no prior convictions that resulted in penalties beyond fines.

The verdict, originally scheduled for July 16, was postponed after Jeong's legal team raised concerns about the evidence, prompting the court to reconsider the arguments. Consequently, prosecutors filed the narrower fallback charges in anticipation of the server evidence being excluded, which ultimately occurred.

Delio had attracted customers by offering high interest rates on deposits of Bitcoin, Ethereum, and other cryptocurrencies, positioning itself as a digital asset bank. The platform abruptly halted withdrawals in June 2023, suspended operations in August after failing to obtain court approval for necessary expenses like hosting, and was declared bankrupt in November 2024.