Cheating And Fraud Case?
According to reports, Hodlnaut lost close to $190 million after lying about its exposure to the now-defunct Terra algorithmic stable coin.
A police investigation into potential cheating and fraud violations is underway against Singapore-based cryptocurrency lender Hodlnaut.
Several complaints made against the platform between August and November 2022 prompted the police’s commercial affairs section to initiate an inquiry into the exchange’s owners, according to sources in the local media.
The company’s exposure to a particular digital token has been the subject of many complaints, according to the Singapore police, who underlined this. The Hodlnaut crisis affected investors urged by the police to submit online complaints and reliable records of their platform transaction history.
Requests for comment from blockchain gossips were not immediately answered by Hodlnaut or the Singapore police.
When the crypto lender banned platform withdrawals on August 8 due to a liquidity crunch, this was the first indication that things were not going well. Withdrawals were stopped only a few months after the infamous crypto pandemic in the second quarter, which was caused by the collapse of the Terra ecosystem.
At the time, the platform asserted that it had no exposure to the TerraUSD Classic, formerly known as the defunct algorithmic Terra stablecoin (USTC). On-chain data, however, refuted the claims of crypto lenders and revealed they had at least $150 million in USTC.
An October court report later verified the on-chain data. According to the article, the cryptocurrency lender suffered a loss of about $190 million due to the Terra collapse and erased thousands of documents about their assets to conceal their involvement.
After the Terra ecosystem collapsed, Hodlnaut was able to conceal its exposure to USTC for almost three months. Still, it succumbed to the liquidity crisis, prompting it to seek judicial management under which a court appointed a new temporary CEO for the company. After three months, the company directors are now being investigated by the police for failing to inform users.
The cryptocurrency lender had stated in August that it was developing a restructuring strategy to start up again shortly.
Singapore police will investigate and get the guilty punished.