Singapore-based cryptocurrency lender Hodlnaut is reportedly under investigation by police for alleged crimes of deception and fraud.
According to news published by local media, the commercial affairs department of the police has started an investigation into the founders of the platform based on the multiple complaints filed against them between August and November 2022.
The Singapore police noted that most of the complaints revolve around false representations and misinformation about the company’s exposure to a certain digital token. the police too advised investors affected by the Hodlnaut crisis to file a formal complaint online and verifiable documents of their transaction histories on the platform.
Neither the Singapore police nor Hodlnaut immediately responded to Cointelegraph’s requests for comment.
The first signs of trouble for the crypto lender came on Aug. 8, when he suspended withdrawals on the platform, citing a liquidity crisis. The suspension of withdrawals came just months after the infamous second quarter cryptocurrency contagion led by the collapse of the Terra ecosystem.
At that time, the platform claimed that it had no exposure to the now-defunct Terra algorithmic stablecoin, now called TerraUSD Classic (USTC). However, on-chain data contradicts the platform’s claims and suggests they hold at least $150 million in USTC.
The on-chain data was later confirmed by a court report in October. The report noted that the crypto lender lost close to $190 million in the collapse of Terra and that it subsequently deleted thousands of documents related to its investments to hide its exposure.
Hodlnaut managed to keep its exposure to USTC secret for almost three months after the collapse of the Terra ecosystem, but eventually fell prey to a lack of liquidity, forcing it to seek a writ of relief, whereby a court appointed a new interim CEO for the company. Three months later, its managers face a police investigation for misinforming users.
In August, the company had said it was working on a restructuring plan with the hope of resuming operations soon.
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