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Singapore Authorities Probes Crypto Lender Hodlnaut over Fraud

Singapore investigative unit initiated a probe against Holdnaut for allegedly denying its exposure to the defunct Terra algorithmic stablecoin collapse and losing $190 million.  

Founded in 2019, the Singaporean crypto lender is in the investigation books for misrepresenting facts of its exposure in the fallen Terra stablecoins. Various reports from the local media acknowledged the commercial affairs department of Singapore police had initiated investigations into the lender. In particular, the inquiry is triggered by the founders’ role in the multiple complaints presented over the lender’s activities from August to November 2022.  

The probe sheet disclosed to the media illustrated the primary complaints involved a false representation of the crypto lender’s exposure to a troubled digital token. Further, the Singaporean authorities directed investors affected by Hodlnaut’s misinformation crisis to lodge complaints online and verifiable proof of ownership documenting the transaction trail.  

Signs of Trouble 

Hodlnaut troubles suffered a contagion crisis following the downfall of TerraUSD Classic (USTC). In a similar pattern replicating current market turmoil following FTX Group’s downfall, the crypto lender announced suspending withdrawals on August 8. The suspension arose liquidity crisis from the crypto contagion witnessed in the 2022 second quarter following the Terra ecosystem implosion.  

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Hodlnaut executives dismissed earlier claims of suffering in USTC’s dramatic fall. Nevertheless, the on-chain data revealed contradicting evidence indicating the Singapore crypto lender lost at least $150 million in the USTC. 

Judicial Discovery of Misrepresentation

The subsequent on-chain data analysis conducted and confirmed by the judiciary in its preliminary report confirmed the million-dollar sunk funds in USTC. In particular, the judicial report observed Hodlnaut lost an estimated $190 million to TerraClassic collapse. The report qualified executives’ wrongdoing to initiate and oversee the deletion of thousands of evidential documents in an attempt to conceal exposure.

While the crypto lender concealed USTC exposure for three months, it fell victim to a liquidity crunch compelling the directors to embrace judicial management. The lender woes worsened from the extreme market conditions experienced as news of insolvent crypto hedge fund Three Arrows Capital (3AC) shook the crypto industry.

Court-led Judicial Management 

The liquidity crunch forced Hodlnaut to front Tam Chee Chong, serving as director of Kairos Corporate Advisory in financial consultancy, to assume interim management. The announcement acknowledged Chong’s four decades of experience in offering corporate finance advisory and judicial management for companies that restructured successfully. 

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Instead, the Singapore Court settled on the EY Corporate Advisors duo Aaron Cheng Lee and Meng Angela for interim judicial management (IJM). The judicial managers would later equate Holdnaut’s loss to $189.7 million. Further inquiry revealed Holdnaut executives converted crypto into UST staked on the collapsed Anchor Protocol aiming to optimize yield. 

Citing improper maintenance of records revealed by the interim judicial managers, Singapore investigators have preferred inquiry into directors’ role in concealing evidence of exposure to collapsed USTC. 


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Andre Louie (Spain)

Andre is a new writer for Tokenhell, writing in both English and Spanish. Andre loves cryptocurrencies and the blockchain / crypto world and has been into Bitcoin since 2012.

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