Haru Invest Declares Bankruptcy After $1B Crypto Scam in South Korea

The Seoul Rehabilitation Court has officially declared Haru Management Limited, the operator of Haru Invest, bankrupt following a so-called “rug pull” incident that defrauded investors of 1.4 trillion won (approximately $1 billion USD).

Local news reports that Haru Invest enticed more than 16,000 investors by promising secure principal protection and offering high returns on cryptocurrency deposits between March 2020 and June 2023. However, in June 2023, the operation fell apart when the platform abruptly halted withdrawals, causing widespread panic. The company was then declared insolvent due to its inability to repay debts.

Despite the company’s incorporation in the British Virgin Islands, the court established jurisdiction due to the company’s substantial operations within the country.

Earlier this year, CEO Hugo Hyungsoo Lee and two other Haru Invest executives were arrested in connection to the same fraud and laundering case. In February 2024, prosecutors filed charges against the executives under South Korea’s Act on the Aggravated Punishment of Certain Economic Crimes. Lee was granted bail in July.

Haru Invest to Be Liquidated

A creditors meeting, with the involvement of a bankruptcy administrator, will be held on February 11, 2025, to assess Haru Management’s financials. This will also start the liquidation process, sparking hope in investors as a possible path toward at least a partial recovery.

Apart from the criminal complaint, investors filed for corporate rehabilitation proceedings in court in June 2023. However, their request was rejected.

This development follows recent reports of the South Korean government intensifying its crackdown on cryptocurrency activities. On Oct. 24, 2024, at the G20 Finance Ministers’ Meeting, Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok addressed the rising cases of illegal foreign exchange transactions, including corporate money laundering linked to drugs and gambling, involving digital assets.

Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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