South Korea Arrests Three Haru Invest Executives for $826M Fraud

South Korean authorities have arrested three executives of troubled crypto yield platform Haru Invest for allegedly stealing 1.1 trillion won ($826 million) worth of crypto from around 16,000 customers, local news agency Yonhap reported on Feb. 6. The company’s CEO is reportedly among the three arrested by the Seoul Southern District Prosecutors’ Office’s Joint Investigation Team for Virtual Asset Crimes.

The investigation also reveals that Haru Invest executives misappropriated most of the coins deposited by clients by reinvesting the assets from March 2020 to June 2023. Moreover, the company falsely advertised that its operations were supported by a “risk-free distributed investment technology” and offered up to 12% yield for its Earn Plus product users.

Amassing investors’ funds, the firm abruptly ceased crypto withdrawals on June 13 last year. At that time, Haru Invest stated that they had encountered a problem with one of their service partners. Moreover, shortly after the suspension, it closed its office in Gangnam-gu, Seoul, which surprised users.

Delio, a depository and management company that had some of its funds with Haru Invest, halted withdrawals the next day, sparking controversy over a ‘rug-pull.’ Rug-pull is a common scam in the crypto industry where creators advertise a project and later disappear with clients’ money.

Consequently, over 100 investors filed a complaint with the South Korean prosecutors accusing the executives of both companies of fraud under the Specific Economic Crimes Act. Haru Invest attributed the issues to the alleged fraudulent activity of consignment operator B&S Holdings, formerly known as Aventus.

Haru Invest Initiates Legal Action Against B&S Holdings

On June 14, the company filed a criminal complaint, alleging that B&S Holdings deceived the company by providing false management reports. Haru Invest claimed that B&S lost 350 billion Korean won ($262 million) worth of funds in the bankrupt FTX exchange. South Korean prosecutors issued an arrest warrant last month for one individual named Bang, a majority shareholder of B&S.

Notice to Investors (June 14, 2023): https://t.co/RN01gswTfq pic.twitter.com/IbYb9dA3oP

— Haru Invest (@haruinvest) June 14, 2023

The recent action against the company executives comes shortly after Haru posted another “no information” announcement. On Feb. 5, the company said there are “no specific updates to share this week.”

The statement reads:

“As of now, no information is available regarding the investigations and overall situation following the detention of Bang Jun-ho, the major shareholder of B&S Holdings. We continue our various efforts for asset recovery as we have been doing.”