April 19, 2024
Delio challenges regulators' interpretation of cryptocurrency laws
Latest Cryptocurrency News

Cryptocurrency Lender Delio Fights Back: Launches Administrative Lawsuit Amid Regulatory Clash

South Korean Bitcoin lender Delio is reportedly gearing up to initiate an administrative lawsuit against regulators, alleging that they misinterpreted the law, triggering an investigation and imposing a substantial fine on the cryptocurrency lending firm.

Delio vehemently refuted the allegations of fraud and embezzlement made by the Financial Service Committee (FSC), as stated in a report published in a local newspaper. The crypto lending entity contended that the regulator applied the law unreasonably in a situation where there were no clear guidelines for virtual asset deposit and management products.

The report disclosed that the Financial Intelligence Unit (FIU) recommended the removal of Delio CEO Jeong Sang-ho through a sanctions announcement on September 1. Delio argued that this move was a clear indication that financial authorities were exerting pressure on them to shutter their business rather than affording them an opportunity to recover. Additionally, the FIU imposed a three-month suspension of Delio’s operations and a fine of 1.83 billion Korean won ($1.34 million).

The company also cautioned that the assets seized by regulators could imperil its operations. Sang-ho voiced concerns that these FIU sanctions left substantial room for unreasonable legal interpretation and arbitrary enforcement. Such conduct by financial authorities, he argued, had the potential to stifle the domestic virtual asset industry. The primary point of contention remains the interpretation of existing laws, particularly regarding whether a lending company that uses virtual assets as collateral for cash loans should be classified as a virtual asset business operator and whether the act of imposing a lock-up constitutes storage of virtual assets under the Special Financial Services Act.

Delio contended that it remains unclear whether virtual asset deposits and management products should be categorized as financial products under the current legal framework. A lawyer representing the firm noted that there were no provisions for laws and regulations specifically addressing virtual assets in the context of the virtual asset management business.

The lawyer argued that the FIU arbitrarily interpreted virtual asset deposits and management products as financial investment products and subsequently imposed sanctions, which, in their view, constituted a misinterpretation of the law.

Image by pixabay

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