A South Korean court has sentenced Delio CEO Jeong Sang-ho to 15 years in prison for virtual-asset deposit fraud, roughly three years after the company abruptly froze customer withdrawals in June 2023.

The 11th Criminal Division of the Seoul Southern District Court, under Presiding Judge Jang Chan, handed down the 15-year sentence. Prosecutors had originally sought 20 years.

Delio accepted Bitcoin and Ethereum deposits and paid interest to customers, advertising guaranteed annual returns of approximately 10% and marketing itself as a "crypto bank." The court determined that this promotional framing was dishonest regarding the product's safety. Delio had told depositors it generated revenue through arbitrage and coin-collateralized lending while concealing early business deficits and operating losses.

The court also found that Jeong submitted falsified loan records valued at 2 billion won to siphon approximately 1 billion won from an investment fund. Additionally, he inflated the company's coin holdings by 47.6 billion won in an audit report used to complete Delio's virtual-asset business registration.

Jeong was convicted under the Act on Aggravated Punishment of Specific Economic Crimes, among other charges.

When indicted by prosecutors without detention in April 2024, Jeong was accused of defrauding roughly 2,800 customers of approximately 250 billion won ($175 million). However, the court ultimately convicted him only on about 70 billion won taken from 1,078 victims.

That discrepancy stems from an evidence dispute between Jeong's defense and prosecutors. Jeong's lawyers argued at the final hearing that the prosecution's search and seizure had been unlawful. The court agreed, finding that investigators failed to provide Delio with a seizure list despite the company owning the server database in question. The court ruled the seized electronic data and any evidence derived from it inadmissible.

Despite the reduced conviction amount, the court characterized Jeong's crime as severe. Many victims reportedly petitioned for a heavy sentence and criticized him for consistently attempting to shift blame onto other companies. Delio was one of the largest crypto-lending platforms in South Korea before its collapse, and the case has become a flashpoint in the country's push to strengthen investor protections for digital-asset services that take customer deposits.

South Korea's Broader Crackdown on Crypto Crime

Lawmakers in South Korea recently approved a rule change eliminating the 1 million won reporting threshold for crypto transfers and adding financial-health tests for exchange operators. Registration provisions take effect August 20, while the expanded Travel Rule follows in February 2027.

Starting August 20, controlling shareholders of virtual-asset service providers (VASPs) will face a new vetting system evaluating legal history, finances, and social standing. Operators must maintain sufficient anti-money-laundering staff and provide 30 days' notice before ownership changes. New market entrants must hold a debt-to-equity ratio at or below 200%.

Separately, the Financial Supervisory Service (FSS) announced plans for an on-site visit to Bithumb after altcoin withdrawals at the exchange were delayed for more than 13 hours. Bithumb attributed the delays to a temporary surge in requests that exceeded its hot-wallet balance and denied any actual shortfall.