Singapore police have announced that they are investigating crypto lender Hodlnaut and its directors for fraud and deceptive practices.
The Commercial Affairs Department of the Singapore Police Force said it would investigate multiple reports it received between Aug. and Nov. These reports claimed that Hodlnaut and its directors made misleading statements about the company’s exposure to an unnamed digital token.
The police urged any other investors believed to have been defrauded by these “false representations” to come forward. In order to assist with the investigation, petitioners should prepare documents related to their transactions with Hodlnaut. These include records of payment in addition to relevant correspondence with Hodlnaut.
The Fall of Hodlnaut
The investigation comes as the latest woe to befall the beleaguered crypto lender. In Aug., Hodlnaut announced that it was suspending withdrawals, token swaps, and deposits for its customers.
In addition to “market conditions,” the collapse of the Celsius Network earlier this year also spurred Hodlnaut’s decision. The network’s bankruptcy papers revealed Hodlnaut as one of its institutional clients.
Consequently, Hodlnaut withdrew its application from the Monetary Authority of Singapore (MAS) to offer regulated digital payment tokens (DPT) services. The Singapore High Court then placed Hodlnaut under judicial management, at the crypto lender’s request.
Similar to bankruptcy, judicial management enables companies to avoid a forced liquidation of their assets and stabilize their financial situation. The court appointed Hodlnaut interim judicial managers and ordered a moratorium on creditor proceedings against the crypto lender.
Last month, a court report revealed that the company directors had been withholding crucial documents from the interim judicial managers. These directors had reportedly been uncooperative with the internal judicial managers by obstructing them from accessing several documents and records.
Singapore and FTX
According to a recent circular from the Hodlnaut’s interim judicial managers, some 25% of its assets were on centralized exchanges. It detailed that 71.8% of these were held on FTX, with an estimated value of S$18.47 million. Despite attempts to withdraw the assets before the exchange’s collapse, the interim judicial managers did not succeed.
MAS recently issued a statement regarding its approach to FTX in light of its collapse. Although it warned users about the risks of investing with unregistered entities, it could not prevent them from doing so.
It also responded to inquiries about placing rival exchange Binance on its Investor Alert List, but not FTX. MAS said it did so because Binance had been actively soliciting users in Singapore, while FTX had not.
Meanwhile, the Singapore state holding company Temasek recently wrote off its entire investment in FTX. With an investment of $275 million, Temasek lost the most among other creditors including SoftBank and Sequoia Capita.