South Korean virtual asset management platform, Haru Invest, has been declared bankrupt by the Seoul Rehabilitation Court. This development follows allegations of a massive fraud scheme that resulted in significant losses for thousands of investors.
Haru Invest previously promised high returns on cryptocurrency deposits. However, in June 2023, the project abruptly halted withdrawals, leaving over 16,000 investors with substantial financial losses. The project is accused of operating a “pump and dump” or “rug pull” scheme. Investors are estimated to have lost about $1 billion in virtual currency.
How Haru Invest Went Bankrupt
While the details of the alleged fraud are still emerging, reports suggest that Haru Invest lured investors with promises of high returns and principal safety, only to mismanage or misappropriate their funds.
The bankruptcy declaration comes after the court determined that Haru Invest, despite being registered in the British Virgin Islands, had significant operations within South Korea, granting the court jurisdiction over the case.
The court cited the company’s inability to meet its financial obligations as the primary reason for the bankruptcy ruling. Company executives are also facing criminal trial for cryptocurrency fraud at the Seoul Southern District Court.
The Ripple Effects of Bankruptcy
Meanwhile, the court has scheduled the first creditors’ meeting for February 11, 2025. During this meeting, a bankruptcy administrator will be appointed to assess Haru Invest’s assets. The administrator will then initiate the process of distributing funds to creditors.
However, given the scale of the alleged fraud, it remains uncertain whether investors will be able to recover their losses fully.
As mainstream adoption of cryptocurrency grows, Haru Invest’s bankruptcy is a reminder of the importance of due diligence and the need for robust regulatory frameworks to protect investors. It underscores the need for greater transparency, accountability, and investor protection within the crypto space.
