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Embattled Yield Platform Haru to Suspend Server in Bid to Cut Costs

source-logo  beincrypto.com 16 October 2023 13:15, UTC

Struggling crypto yield investment platform Haru Invest (Haru) is mulling switching off servers to cut costs. The company wants to lower overhead costs until it can reimburse its customers amid bankruptcy proceedings.

According to Hugo Lee, the Haru CEO, the investment company will back up its server to avoid losing customer information. Communication systems critical to facilitating a smooth transfer of customer assets will be kept on as long as possible.

Haru Delays Cutting Communication Costs

Lee confirmed in an announcement dated Oct. 16:

“We expect to continuously incur the cost of communication with members until we distribute members’ assets (although it is difficult to predict when it will be), so our plan is that this should be the last item to save on.”

He added that the company would inform customers when the cost-reduction plans become clearer. Earlier this year, the company fired 100 employees as it sought to cover costs arising from legal disputes.

The company served customers in 140 countries before suspending withdrawals on June 13. Lee later revealed that Haru was pursuing legal action against B&S Holdings, a service provider it argues was the reason for the suspensions.

Read more: Understanding How Yield Farming Works (Beginner’s Guide)

Its asset-freezing affected Delio Investments, a South Korean lender that chose to invest customer money in Haru. Following the suspensions, a group of Haru customers filed a class-action lawsuit, accusing the platform of conducting risky trades and abusing customer funds.

Frustrated Haru Customers Fume at Delays

Haru customers derided the platform’s latest plan to reduce costs, arguing it was pointless. Turning off a server could, at most, cut operating costs by $200 without expediting the recovery of customer funds, one person said.

Others, like Ronald Blinks, have made peace with the fact that they may never see their money again.

“No one is getting any money back, at least not in 2 years, and not 100%.”

One hopeful, who goes by the moniker Seng, argued that if Haru’s situation were not as bad as FTX, which had a $7-8 billion hole in its balance sheet, the chance of reimbursement might be “more positive” than “initially thought.”

Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell

Several community members criticized Haru’s infrequent communications, a frustration that may have started since the platform suspended withdrawals. Lee waited one week before disclosing the reason for the suspensions and has not provided a concrete bankruptcy roadmap.

But those unhappy with his leadership may have little choice but to wait things out. South Korea’s revised bankruptcy Act, enacted in 2006, allows the incumbent CEO to become the bankruptcy manager.

Number of Bankruptcies South Korea | Source: TradingEconomics

Under the previous regime, the manager would be forced to resign and cede executive authority to a restructuring expert.

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