South Korean prosecutors have arrested several executives of the troubled cryptocurrency yield platform Haru Invest, which suspended withdrawals in June 2023. Seoul prosecutors announced Monday that they arrested and detained three executives from Haru Invest’s crypto yield platform, including its two co-CEOs. According to Yonhap News, the crypto deposit platform allegedly defrauded customers and embezzled over 1 trillion won in coins.
The arrested individuals, including Haru Invest’s CEO and two other executives, face charges of embezzling 1.1 trillion won ($830 million) in cryptocurrency from approximately 16,000 Haru Invest customers. Prosecutors allege that the executives misappropriated the majority of customer deposits by reinvesting the assets from March 2020 to June 2023, deceiving investors with false claims of operating a stable business using “risk-free diversified investment techniques.”
Haru Invest, which had promoted itself as a trustworthy crypto yield platform offering up to 12% yield for its Earn Plus product users, now faces severe scrutiny over its investment practices.
Investigations reveal that instead of employing the advertised “risk-free distributed investment techniques,” Haru Invest primarily channeled client deposits through a single individual, contradicting its public assertions and raising questions about its commitment to transparency and fiduciary responsibility.
Later, Haru Invest made another announcement on X, stating there are “no particular updates to share this week.” Signed by CEO Hugo Lee, the company’s decision to suspend withdrawals on June 13, 2023, still lingers without adequate clarification or a resolution, leaving investors uncertain.
This move was initially explained as a protective measure following a business error attributed to misleading information from a consignment operator. Yet, the lack of subsequent actions or explanations fueled speculations and concerns within the user base.
The aftermath of Haru Invest’s alleged mismanagement extended to the wider crypto industry, with crypto lender Delio, a former collaborator, also halting withdrawals.
The synchronicity of Delio’s suspension with Haru’s on June 14, 2023, suggests a potentially deeper connection between the two entities, highlighting the pervasive uncertainty and risks inherent in the crypto space.
Adding complexity to the situation, Haru filed a criminal complaint against B&S Holdings, its consignment operator, accusing them of deceit and attributing a substantial loss of over $260 million to their mishandling in the aftermath of the FTX collapse.
Haru Invest attributed the issues to alleged fraudulent activities by consignment operator B&S Holdings, formerly known as Aventus. Haru Invest operated a cryptocurrency yield platform, promoting its services by offering investors the opportunity to earn annual interest rates of up to 12% on cryptocurrency deposits. However, the suspension of withdrawals prompted Delio and other affected investors to file a class-action lawsuit against Haru in June 2023.