Another cryptocurrency lender is in the hot seat, under investigation by government authorities. This ‘loans’ group was not in the USA however. Just outside of China, Hodlnaut crypto-lending firm is under investigation by Singapore authorities for cheating and fraud.
The commercial affairs department of Singapore Police is investigating the digital currency lender over multiple complaints. Several people were alarmed by the companies’ shift of available services between Augusta and November of this year.
Hodlnaut Blocked Withdrawals
The 8th of August, Hodlnaut suspended withdrawals, citing a massive liquidity issue.
It’s suspected the crypto firm was exposed to the crash of TerraUSD Classic (USTC). The now-defunct token, had an ultimate collapse in May 2022, triggered by a few trades of crypto whales.
Though representatives of the brand denied connection, on-chain data suggested otherwise. The Singapore crypt-lender actually had $150-million-dollars worth of the USTC ‘stablecoin’ seen in analysis.
Later, when subpoenaed to court, official documents of the company revealed it was even worse than the $150M. At least $190-million-dollars worth of USTC tokens were purchased by the company.
The courts’ investigation also found Hodlnaut hid their exposure to the crash for at least 3 months.
New CEO Ordered By Singapore Judge
After the bad deeds were finally exposed, the company filed in Singapore courts for seizure of control of the business — known as a ‘ judicial manager’s takeover’ in Singapore. This allowed the company to be protected while restructuring and implementing a new interim CEO.
Not enough for the potential creditors hunting their money taken by the crypto-lender.
That new Chief Executive Officer is now under investigation 3 months later for the same thing. But this time authorities believe the complaints to be results of false information. New rumors have suggested that Hodlnaut has exposure to other collapsed coins as well.
Hodlnaut had a debt of $281,000,000 back in August of 2022. The company only had $88-million in liquidable assets however. This left the Singapore DeFi lender owing ‘potential creditors’ at least US$193M.
It’s believed there are 17,000 of the creditors, waiting for their part of the $193,000,000. These are also the people who once saw the lending firm as an intelligent financial tool and investment.
Their crash is eerily similar to what happened to Sam Bankman-Fried’s FTX crash, but far less debt.
Authorities believe Hodlnaut’s new corporate office is doing good business. The complaints of cheating and fraud Singapore Police believe will dissolve with the publication of accurate information about the lender.