Hodlnaut, a crypto lender, is reportedly the subject of a police investigation in Singapore. Hodlnaut is said to have lost nearly $190 million by lying about its exposure to the now-defunct Terra algorithmic stablecoin.
Hodlnaut, a crypto lender based in Singapore, is reportedly the subject of a police investigation for alleged fraud and cheating.
Based on numerous complaints made against the platform between August and November 2022, the police’s commercial affairs department has launched an investigation into the exchange’s founders, according to reports in local media.
According to the Singapore police, the majority of complaints involve misleading statements and representations regarding the company’s exposure to a specific digital token. Investors who were impacted by the Hodlnaut crisis were also advised by the police to submit verifiable documentation of their platform transaction histories and to file a complaint online.
Both Hodlnaut and the Singapore police did not immediately inquiries for information.
The crypto lender suspended withdrawals from the platform on August 8 citing a liquidity crisis as the first indication of trouble. The infamous crypto contagion that took place in the second quarter and was caused by the Terra ecosystem’s implosion was just a few months before withdrawals were stopped.
The platform claimed at the time that they had no exposure to the algorithmic Terra stablecoin, which is now TerraUSD Classic (USTC).On the other hand, on-chain data suggested that crypto lenders held at least $150 million in USTC, contrary to their claims.
A judicial report in October later confirmed the on-chain data.The crypto lender lost nearly $190 million as a result of Terra’s collapse, and they later deleted thousands of documents related to their investments to conceal their exposure, according to the report.
After the Terra ecosystem collapsed, Hodlnaut was able to conceal its USTC exposure for almost three months. However, when the liquidity crunch hit, the company was forced to seek judicial management, under which a court appointed a new interim CEO for the company.
After three months, its directors now face a police investigation for keeping users in the dark.
The crypto lender stated in August that it was developing a restructuring strategy with the intention of soon returning to business.