Haru Invest, a South Korean crypto yield platform, has been declared bankrupt by the Seoul Rehabilitation Court. This scam making history as one of the biggest crypto scams in the industry has just met its end. Over 16,000 investors were deceived and losses are over $1 billion. This is what happens when crypto schemes are left unchecked.
The Haru Management Limited-operated platform gained popularity from March 2020 to June 2023 with promises of principal safety and very high returns in crypto. All this house of cards fell apart in mid-2023 when the company froze the withdrawals, and panic set in while investigations followed.
Haru Invest’s Fraudulent Operations Revealed
Haru Invest was incorporated in the British Virgin Islands but largely operated out of South Korea, a fact that became crucial during the bankruptcy proceedings. An investigation found the platform was engaged in fraudulent activities and siphoned off 1.4 trillion won, approximately $1 billion USD from investors.
South Korean police arrested several executives including CEO Hugo Hyungsoo Lee in early 2024 and charged them for misappropriation and money laundering of user funds on a large scale.
Despite being incorporated internationally, the Seoul Rehabilitation Court ruled it has jurisdiction over Haru because of its extensive operations in the domestic area. The Court called crypto fraud as both local and global but the former suffers more damage.
Liquidation to Offer Partial Recovery
Haru Management Limited will go into liquidation to recover assets for the defrauded investors. The first creditors’ meeting on February 11, 2025 will set the tone for the repayment plan. Bankruptcy administrators will seize and liquidate the remaining company accounts, crypto holdings and other assets.
Unlike in criminal cases where asset recovery is done piece by piece, in bankruptcy it’s a more structured process. The trustees will study Haru’s financial situation and formulate a plan to distribute the available money among the creditors.
But how many will actually get to recover remains unclear, given the scale of the fraud.
Haru Invest Bankruptcy’s Impact on Crypto Industry
The Haru Invest case only highlights the need for stricter regulations in crypto. Fraudulent platforms with high yields have been exposing the loopholes, and often, it’s the investors who pay the price.
Industry leaders are calling for more transparency and better mechanisms to screen crypto platforms. The Haru case also raises questions about the role of jurisdictions like the British Virgin Islands in enabling such schemes to operate under limited scrutiny.
This is not the first crypto implosion, FTX is a good example. Due diligence is important for all.
Conclusion
Haru Invest is a stark reminder of the risks in crypto. Liquidation is underway, and investors are hoping for some relief. Right now, the crypto world is dealing with another mess.
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