"Prosecutors' Search Ruled Illegal"... Delio CEO Sentenced to 15 Years for 'Virtual Asset Fraud'

Court Rules Prosecutors' Seizure and Search Were Illegal
Main Charge Involving 240 Billion Won Found Not Guilty
"Stability Stressed While Hiding Ponzi-Style Operations"

The CEO of Delio, a cryptocurrency deposit firm who concealed the company’s business insolvency and its Ponzi-style operations while luring customers with high interest rates to collect virtual assets worth around 70 billion won, was sentenced to 15 years in prison and taken into custody following the first trial verdict.

Seoul Southern District Court. Photo by Jiye Lee

On August 13, the Criminal Division 11 of the Seoul Southern District Court (presiding judge Chang Chan) sentenced Mr. Jung, the 50-something CEO of Delio, to 15 years in prison after he was prosecuted without detention on charges of fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.

Jung was brought to trial on charges of embezzling customers’ virtual assets while hiding Delio’s virtual asset operation losses from August 2021 to June 2023, which prevented him from paying customers the interest he had promised. He was also accused of submitting false documents inflating the amount of held virtual assets when registering as a virtual asset service provider.

The court recognized approximately 1,100 victims and estimated the damage at around 71.5 billion won. However, the main charge brought by prosecutors—that he defrauded more than 2,800 victims of approximately 245 billion won in virtual assets—was found not guilty. The court cited that the prosecution’s server seizure and search procedures were illegal and, therefore, the electronic information obtained could not be admitted as evidence.

The court stated, "During the seizure and search, the prosecution did not guarantee Delio’s right to participate nor did they provide an inventory of seized items," adding, "The seizure and search procedures were illegal." As a result, both the electronic information secured and any secondary evidence derived from it were not recognized as evidence. However, the supplementary charges—relating to around 1,100 additional victims and damages of about 70 billion won—were mostly upheld as guilty. For 41 of these alleged victims, the court found there was insufficient evidence to prove the damages, and thus ruled not guilty.

The court found that since around March 2022, Delio had engaged in a Ponzi-style operation, using deposited principal to pay customer interest because operational earnings alone could no longer cover the promised rates. The company then managed most of its virtual assets in highly risky ways, such as entrusting them to external firms without adequate collateral, without informing customers of these practices.

The court pointed out, "Had these facts been properly disclosed, customers would not have deposited their virtual assets," and emphasized, "The defendant touted unsustainable high interest rates and used ad slogans such as ‘crypto bank’ that stressed stability to defraud an unspecified number of victims out of large sums."

The court, citing concerns over flight risk, ordered Jung to be taken into immediate custody.

This content was produced with the assistance of AI translation services.