By
Steve Muchoki
May 8th, 2024
The allegations against Haru Invest paint a picture of deception and mismanagement.
In a recent development, South Korean prosecutors have announced the arrest and detention of three executives, including the CEO, of crypto yield platform Haru Invest. Accused of perpetrating a staggering $826 million cryptocurrency fraud, the executives allegedly misled approximately 16,000 users, marking one of the largest cryptocurrency scams to date.
The Haru Invest Fraud Allegations
Haru Invest garnered attention in the virtual asset sphere in its prime by enticing investors with promises of high-interest rates of up to 12% per annum for depositing digital assets.
However, disillusionment set in when approximately 100 investors lodged complaints with prosecutors in June 2023, accusing executives of both Haru Invest and Delio of perpetrating fraud under the Specific Economic Crimes Act.
The allegations against Haru Invest paint a picture of deception and mismanagement. Reports from local news media suggest that the firm engaged in fraudulent activities, falsely representing its investment strategies and misappropriating client deposits between March 2020 and June 2023. Instead of employing the promised “risk-free distributed investment techniques,” Haru Invest allegedly concentrated most of its client funds through a single individual, misleading investors about the nature of their investments.
The fallout from Haru Invest price collapse has been severe, with many victims suffering financial losses and seeking justice through legal channels. Accordingly, authorities have also imposed travel bans on suspects to prevent them from leaving the country while promising to pursue all avenues to recover victims’ losses and confiscate criminal proceeds.
Notably, the fallout extended beyond Haru Invest itself. Delio, another company involved in depositing funds into Haru Invest, also suspended withdrawals the following day, sparking allegations of a ‘rug pull’, a term referring to sudden fraudulent withdrawals or asset misappropriation.
Haru Initiates Counter Complaint
In a retaliatory move, Haru filed a criminal complaint against consignment operator B&S Holdings, alleging deception and blaming the company for $260 million in losses incurred during the collapse of FTX. Last month, South Korean authorities filed an arrest order for one individual called Bang, who is the primary stakeholder in B&S. Bang’s full name is not revealed due to privacy laws in South Korea.
These regulatory scrutinies reflect global concerns over the stability and transparency of the crypto lending sector, with regulators seeking to bolster consumer protection against inherent risks.
Meanwhile, amidst the turmoil, Coinbase Global Inc (NASDAQ: COIN), one of the leading crypto exchanges, has announced plans to launch a crypto lending service for institutional clients in the United States. The move is seen as an attempt to fill the void left by the collapse of major crypto lenders and to offer institutional investors alternative avenues for generating returns on their digital assets.
By providing a secure and regulated platform for lending and borrowing digital assets, Coinbase aims to advance the adoption of cryptocurrencies and contribute to the growth of the crypto ecosystem.