A court in Seoul has sentenced Delio CEO Jeong Sang-ho to 15 years in prison over the collapse of the South Korean crypto deposit platform, handing down a term that was five years shorter than prosecutors had requested.

The ruling rested only in part on the prosecution’s original allegations. After the court found that a key search of server host Gabia had been unlawful, Delio’s database and related materials were excluded, sharply reducing the scope of the fraud case that could be proved at trial.

Search ruling reshaped the prosecution case

The court said prosecutors had failed to protect Delio’s right to participate in the search of Gabia, the company that hosted the platform’s servers, and had not provided a list of items seized in that process. Because of those procedural failings, the court held that the database and connected evidence had no evidentiary value.

That decision significantly weakened the indictment. The prosecution’s broader theory of the case was not fully accepted, and Jeong was convicted mainly on fallback charges that had been filed after the evidence challenge narrowed what could be used in court.

Case narrowed from 2,800 alleged victims to about 1,100

The original indictment accused Jeong of defrauding around 2,800 people of about 250 billion won, or roughly $176 million, in crypto assets between August 2021 and June 2023.

What remained after the evidentiary ruling covered about 1,100 victims and approximately 70 billion won, or about $49 million. The court also acquitted Jeong in relation to 41 additional alleged victims because no evidence had been submitted for those counts.

VASP registration charge also upheld

In addition to the fraud-related convictions that survived, the court found Jeong guilty of obtaining Delio’s virtual asset service provider registration by using a falsified accounting firm report.

Prosecutors said the report exaggerated Delio’s coin holdings by about 47.6 billion won, roughly $34 million. The court concluded that Jeong had secured the license dishonestly and had then taken in more than 70 billion won from customers.

Court cites misleading promotion and collapse of the platform

According to the court, Jeong marketed Delio as a crypto bank even though he did not have the capacity to operate it properly. The court also said he later tried to avoid responsibility by attributing the failure to return customer assets to bankruptcy.

At sentencing, however, the court also took account of mitigating factors. It noted that external events contributed to Delio’s collapse and that Jeong had no prior convictions carrying a punishment heavier than a fine.

Delio’s shutdown followed a sudden withdrawal halt

Delio had offered high interest on deposits of Bitcoin, Ethereum and other tokens while presenting itself as a digital asset bank. In June 2023, it halted withdrawals without warning.

The company suspended its service in August 2023 after failing to obtain court approval for operating expenses including web hosting. Delio was later declared bankrupt in November 2024, marking the formal end of a platform whose failure had already left large numbers of customers unable to access their assets.

Source: decrypt.co