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- Singapore charges Hodlnaut founder over alleged TerraUSD exposure misrepresentation claims.
- Authorities say Hodlnaut concealed major TerraUSD losses from customers during market collapse.
- Singapore continues expanding crypto enforcement amid growing scrutiny on industry disclosures.
Singapore’s authorities have accused former CEO of Hodlnaut, Zhu Juntao, of fraud in connection with statements made in relation to the collapse of TerraUSD in 2022. Prosecutors charged that Zhu made false statements that minimized Hodlnaut’s financial risk during a dramatic decline in the crypto market.
The accusations focused on tweets sent out via Hodlnaut’s official communication channels during the TerraUSD crisis. As customers were still using the platform, those claims were said to be inaccurate about the company’s actual financial state by authorities. In August 2022, Hodlnaut froze out withdrawals when it saw liquidity issues permeating the crypto lending industry. Prior to the collapse of the operations, the company stated that it had over 30,000 clients around the world for its lending and yield offerings.
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Singapore Police Say Hodlnaut Misrepresented TerraUSD Exposure
Singapore police have charged Zhu with six offences related to the posts he made on Hodlnaut’s Telegram channel and company emails. Authorities claimed the statements gave users the impression that the platform did not have any direct exposure to TerraUSD and that it did not suffer any losses as a result of the stablecoin’s collapse. However investigators said that during that time, Hodlnaut made significant losses associated with TerraUSD. This means that the company’s financial statements were not accurate, and the company misled customers and investors about its financial status.
It is also alleged that Zhu was making similar statements on his personal X account (formerly Twitter) during the market downturn. All those statements, it was claimed, repeated the denial of exposure to TerraUSD, in the context of the failed token. According to a prior affidavit Hodlnaut has seen the value of his holdings drop by almost $189.7 million since TerraUSD collapsed in May 2022. That figure directly contradicted the public statements made which said the company did not suffer any losses related to the stable coin.
Singapore Continues Expanding Crypto Enforcement Measures
In the wake of multiple exchange and lending platform failures in the digital asset industry, Singapore regulators have stepped up their monitoring. Also, the authorities have stepped up their efforts on the front of misleading disclosure and cryptocurrency manipulation. Singapore last year arrested and extradited three people to the U.S. to face charges related to its cryptocurrency wash trading operations. Police said those companies had “coordinated trading” that led them to artificially boost trading volumes and prices.
In addition, regulators from various jurisdictions have placed more pressure on crypto executives on transparency during financial turmoil. During market crises, therefore, the enforcement authorities are now paying closer attention to public statements. In Singapore, Zhu could face up to 20 years in prison or financial penalties or a combination of both. No further details have been provided about any other former Hodlnaut executives who may be under investigation.
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