Another crypto company in hot water—police to probe Hodlnaut for cheating & fraud

Cryptocurrency lender Hodlnaut is being investigated by the white-collar crime unit of the Singapore Police Force, the latest in a series of scandals that had rocked the industry, which has been very loosely regulated, this year.

The police’s Public Affairs Department issued a statement on Wednesday (Nov 23), saying that the Commercial Affairs Department began an investigation into the company and its directors for suspected offences under Singapore law.

The statement noted that multiple police reports had been filed between August and November of this year “alleging that Hodlnaut and/or its directors had made false representations relating to the company’s exposure to a certain digital token.”

Because of these reports, the company and its directors are now under investigation for possible cheating and fraud offences under Sections 417 and 424A of the Penal Code 1871.

“If you have deposited digital tokens with Hodlnaut and believe that you may have been defrauded through, among others, false representations made by Hodlnaut, you may wish to lodge a police report at the nearest Neighbourhood Police Centre” or online, the police added.

The police are asking individuals who have these concerns to provide documents relating to their transactions with Hodlnaut. “Such documents include the records of the payments made to and received from Hodlnaut as well as relevant correspondence with Hodlnaut,” the police added.

The company, a cryptocurrency lending and borrowing platform, was started in Singapore in 2019 by Juntao Zhu and Simon Lee. 

While the platform has alarmingly lost a sizable 69 per cent of the cryptocurrencies that users deposited onto it, Hodlnaut’s website is still up. It touts itself as “The easiest way to earn interest on cryptocurrencies,” and says users may “earn up to 7.25 per cent APY with a crypto interest account from Hodlnaut. Deposit your crypto and start earning immediately with just US$1 and no lock-in periods.”

As of Aug 8, users were no longer able to withdraw their cryptocurrencies from Hodlnaut. At that time, the company said this was due to market conditions. However, it was later revealed that Hodlnaut had been keeping nearly all the funds that users put into it in the TerraUSD stablecoin, which collapsed in May.

Bloomberg reported that Hodlnaut HK suffered a US$190 million (S$261 million) loss in the wake of TerraUSD’s collapse. /TISG

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