Haru Invest CEO, two others arrested in South Korea for $828m crypto fraud

South Korean authorities are making headway in the Haru case from 2023, where the yield-bearing service froze withdrawals after accepting nearly $1 billion from customers.

The Joint Investigation Team of Virtual Asset Crimes in Seoul’s Southern District Prosecutors’ Office has arrested three individuals believed to be executives of Singapore-based crypto firm Haru Invest.

According to local media outlet Yonhap News, one of the detained suspects is the company’s CEO, Hugo Lee. Lee had signed a message posted on X a day before the arrest notice, claiming no updates to share with the public. 

South Korean law enforcement arrests are part of an ongoing investigation into 1.1 trillion won, or roughly $828 million, allegedly stolen by Lee and other executives between March 2020 and June 2023.

Haru Invest touted itself as a risk-free crypto platform offering double-digit yields to depositors. Last year, Haru disclosed supposed issues with its financial partners and abruptly suspended withdrawals.

Users were also barred from depositing more digital assets in the service, and Haru fired some 100 employees in a shakedown that promised to lead the company out of turbulent times. 

South Korea cracks down on crypto crime

The latest update from South Korean authorities suggests that Lee and other top-ranking members at the firm masterminded an elaborate scheme to defraud customers of their virtual currencies without delivering on the yield.

In crypto, this is commonly known as a rug pull and speaks to projects absconding with funds after marketing a service. Haru denied the allegations then and claimed its high-yield crypto investment platform had packed up shop due to external factors.

South Korea’s government seems to be paying more attention to blockchain and cryptocurrencies, a burgeoning industry that needs oversight and regulations. Authorities have called for public reports on unlicensed service providers while mandating crypto disclosures from government officials.

The country’s top financial watchdog also proposed rules to safeguard crypto users, and federal prosecutors are going after defaulters. One of these high-profile cases involves Terraform Labs and its founder, Do Kwon, both tied to a $60 billion ecosystem failure reverberating throughout crypto’s global economy.