Crypto lender Hodlnaut and its director is reportedly being investigated by the Singapore police over alleged fraud and cheating offenses. Zhu Juntao and Simon Eric Lee, Hodlnaut’s co-founders, both serve as directors.
The reports revolves around false representations and misinformation
According to an official statement, Singapore’s Commercial Affairs Department (CAD) started an investigation into troubled cryptocurrency lender Hodlnaut on Wednesday.
“On 23 November 2022, the Commercial Affairs Department (“CAD”) launched an investigation into Hodlnaut Pte. Ltd. (“Hodlnaut”) and its directors,” cited the official.
The police received many reports between August and November accusing Hodlnaut and its directors of making “false representations” about the lender’s exposure to “a certain digital token.”
The Singapore police also encouraged investors affected by the Hodlnaut crisis to file a complaint online and provide verification of their transaction histories.
The unknown token likely refers to Terra
This certain digital token is likely Terra’s now-collapsed USTC, formerly known as UST, an algorithmically dollar-pegged stablecoin that depreciated rapidly in May.
Hodlnaut is feeling the pain from a market rout since stablecoin TerraUSD and sister token Luna collapse.
The directors of Hodlnaut downplayed their exposure to Terra/Luna both before and after Terra/Luna went belly up in May 2022, according to earlier reports.
A number of businesses, including the hedge fund Three Arrows Capital and crypto lenders Celsius Network and Voyager Digital, have filed for bankruptcy protection.
Earlier reports indicated Hodlnaut had suffered nearly US$190 million (S$263 million) losses.
Additionally, 72% of the assets, or $18.5 million, were stuck at FTX, and interim judicial managers attempted, but failed to withdraw the assets from FTX before withdrawals were suspended.
An August liquidity crisis forced Hodlnaut to stop withdrawing funds from his account, leading him to file for protection against creditors in Singapore’s High Court.