By Michael Scott
South Korean saving and lending protocol Delio announced the temporary suspension of withdrawals. Delio’s announcement comes days after rival platform Haru Invest froze withdrawals restating its commitment to safeguarding the customers’ assets.
Market Volatility Forces Delio to Suspend Withdrawal Service
Delio conveyed the announcement on Wednesday, June 14, via its official blog, indicating suspending withdrawals was inevitable given the spike in market volatility. The Korean crypto-based lender lamented that the market volatility triggered confusion among its investors.
Adopting the cautionary measure aligns with Delio’s principles to prioritize safeguards for the digital wealth of customers. The firm added that suspending withdrawals would offer its internally assembled team to grasp the facts and likely ramifications of the volatile market.
Haru Invest Halts Deposits and Withdrawals
The notice by the Korean lender references the recent move by Haru Invest, citing that its service providers are confronting liquidity issues. The South Korean earning platform indicated on Tuesday, June 13 it would halt deposits and withdrawals.
Haru Invest revealed that it serves 80000 customers spread across 140 counties. The earning platform illustrated that its assets under management approximated $1 billion, echoing its April 18 update.
Delio cited similar figures on its website, though with slightly higher assets. In particular, the website has 41743 bitcoin valued at $1.1 billion and 118,083 ether worth $206 million.
Like Haru Invest, Delio offers crypto savings with an annual per cent yield exceeding 10%. Haru offers better returns on some of its products, with annual per cent yields that surpass 50%.
The announcement by Delio to suspend withdrawals reignites past experiences with crypto-based loans, including Celsius and BlockFi. Similarly, Delio offers crypto-backed loans with users obligated to offer crypto collateral that exceeds the requested amount.
Delio and Haru Invest are replicating the footsteps of BlockFi and Celsius, suspended withdrawals citing the crypto market meltdown. The duo would finally seek bankruptcy protection in 2022 as the market decline eroded their capacity to pay obligations owed to creditors.
South Korean Firms Prioritize Customer Funds Safety to Terminate Services
Unlike Delio, Haru Invest terminated withdrawals from its crypto earn platform. The firm lamented the decision to suspend withdrawals though necessary to protect consumer funds, as it devises a contingency plan to resolve the situation that befell its service partner.
Haru Invest, though noncommittal on the restoration date, acknowledged its unmatched annual yields ranging from 12% to 25% on Bitcoin, XRP, Tether, Celsius Tank and Ether.
Meanwhile, crypto-based lenders are struggling with market volatility and enforcement actions imposed by regulators. The latter is evident in Nexo’s $45 million settlement with the SEC in January. Nexo hit a regulatory dead-end with the SEC obligating it to exit the United States.
A similar episode is evident in Canada with the securities regulations prohibiting crypto margin trading. The decision compelled LEDN to terminate offering savings products to Canadian clients.