Hodlnaut Faces Investigation Over UST Holdings


Singapore’s Commercial Affairs Department (CAD) announced an investigation into Hodlnaut’s crypto holdings. It alleges that Hodlnaut downplayed his holdings into a “certain digital token” – likely UST.

The investigation will probe Hodlnaut’s lending company, Hodlnaut Pte. Ltd., and its directors under Penal Code 1871. It cites multiple reports it received alleging undisclosed exposure to the digital token.

Terra (UST) was an algorithmic stablecoin backed by Terraform Labs and creator Do Kwon. It unpegged from its target value of US$1 in May 2022, taking the entire Terra ecosystem with it. In the wake of UST’s collapse, Voyager Digital, Celsius Network, and Three Arrows capital went bankrupt due to their oversized exposure to UST and the Terra ecosystem.

The Hodlnaut lending platform offered up to 7.25% APY on digital asset deposits. It supported BTC, ETH, WBTC, PAXG, USDC, USDT, and DAI.

Hodlnaut currently faces liquidity troubles due to its alleged $193 million exposure to UST. On August 8, 2022, it froze deposits, withdrawals, and token swaps to give itself time to work with its legal team in an attempt to resolve the issue. Options include a restructuring plan that might include bankruptcy proceedings. It filed for interim judicial management on August 13 to protect itself from legal claims and cut 80% of its staff.

Hodlnaut also reportedly kept $13.4 million in assets on the now-defunct FTX. That represented 72% of the assets it had on centralized exchanges.

Singapore’s High Courts granted its bid for judicial management on August 30. Two interim managers from EY Corporate Advisors Pte. were assigned to the case. Hodlnaut later petitioned for their removal, alleging that EY had engaged in dishonest practices.

Singapore’s Commercial Affairs Department frequently investigates white-collar crimes. It invites individuals who lost money due to Hodlnaut’s alleged fraudulent actions to file a police report. It asks complainants to provide documentation that might provide valuable evidence in its investigation, including communications with Hodlnaut.