Delio CEO sentenced to 15 years in prison over W70b crypto fraud

Jung Sang-ho, 54, chief executive of Delio — a cryptocurrency deposit service at the center of a 245 billion won ($173 million) virtual asset withdrawal freeze — was sentenced to 15 years in prison at his first trial and taken into custody in the courtroom.

Seoul Southern District Court's Criminal Division 11, presided over by Judge Jang Chan, handed down the sentence Thursday on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes.

Jung is accused of defrauding investors by promising high-yield returns in exchange for depositing virtual assets over a set period between August 2021 and June 2023. Delio managed deposited virtual assets to generate returns and paid annual interest of 12 to 15 percent. The company abruptly halted all withdrawals on June 14, 2023.

The court found that Delio had continued to attract customers by advertising high interest rates without properly disclosing that its holdings had fallen far short of deposited assets due to accumulated operating losses and hacking damage.

"The company advertised unsustainably high interest rates despite lacking the capacity to manage virtual assets," the court said, adding that Delio had "excessively promoted itself using terms emphasizing stability, such as 'crypto bank,' to defraud a large number of victims of large sums."

The court also noted that "countless victims have suffered serious financial harm and recovery does not appear easy," and that "victims are petitioning for severe punishment."

However, the court cited the collapse of FTX as an external factor that helped trigger the incident, offering that as part of its sentencing rationale.

Prosecutors had indicted Jung in April 2024, alleging he defrauded more than 2,800 investors of 245 billion won in virtual assets between August 2021 and June 2023. During the trial, Jung's defense argued that prosecutors had conducted an unlawful search and seizure at Gabia, the server hosting company used by Delio, rendering the electronic evidence obtained inadmissible.

The court accepted that argument, ruled the key electronic evidence gathered in the search inadmissible and acquitted Jung on the original charges based on that evidence.

Prosecutors subsequently added alternative charges specifying individual victims and the scale of damages. The court found most of those charges proven, ultimately convicting Jung of defrauding investors of approximately 70 billion won in virtual assets.

Prosecutors had sought a 20-year sentence at the closing arguments on July 27.

The court ordered Jung detained in the courtroom Thursday, citing a risk of flight.