Hodlnaut, a Singapore-based cryptocurrency lender, is allegedly under investigation by authorities for suspected cheating and fraud. Local news sources say that the commercial affairs section of the police has started an investigation into the exchange’s founders because of complaints about the site from August to November 2022.
According to Singapore authorities, the bulk of complaints include deceptive claims and misrepresentations about the company’s exposure to a certain digital token. The police also recommended that investors affected by the Hodlnaut problem register a complaint online and provide reliable documentation of their platform transaction history.
The crypto lender’s first hint of problems came on August 8, when it banned withdrawals from the site, alleging a liquidity shortage. Withdrawals were stopped just a few months after the second-quarter crypto epidemic, which was caused by the collapse of the Terra ecosystem.
The site asserted at the time that it had no exposure to the now-defunct algorithmic Terra stablecoin, now known as TerraUSD Classic (USTC). On-chain data, however, contradicted crypto lenders’ statements, indicating that they had at least $150 million in USTC. In October, a court assessment verified the on-chain data. According to the article, the crypto lender lost roughly $190 million as a result of the Terra crash and afterwards destroyed thousands of documents relating to their assets to conceal their liability.
Hodlnaut managed to keep its USTC exposure hidden for over three months after the Terra ecosystem’s demise, but it finally succumbed to the liquidity crisis, prompting it to seek judicial supervision, under which a court appointed a new temporary CEO for the business. Three months later, its directors are being investigated by the authorities for failing to keep users informed. The crypto lender said in August that it was working on a reorganisation plan and hoped to resume operations shortly.
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