Singapore crypto-lending provider Hodlnaut is reportedly facing a police investigation for alleged cheating and fraud offences.
According to news published in local media, the Commercial Affairs Police Department launched an investigation into the founders of the exchange based on numerous complaints against the platform between August and November 2022.
Singapore police noted that most of the complaints revolved around false statements and misinformation regarding the company’s exposure to a certain digital token. The police also advised investors affected by the Hodlnaut crisis to file a complaint online and submit verifiable documents about their transaction history on the platform.
Neither Singapore police nor Hodlnaut immediately responded to Cointelegraph’s requests for comment.
The first signs of trouble for the crypto lender appeared on August 8, when it was suspended withdrawals on the platformreferring to the liquidity crisis. The suspension of withdrawals comes just months after the infamous second quarter crypto contagion led by the Terra ecosystem implosion.
At the time, the platform claimed it had no exposure to the now-defunct algorithmic Terra stablecoin now called TerraUSD Classic (USTC). However, the chains’ data contradicted the crypto lenders’ claims, suggesting they held at least $150 million in USTC.
Chain data was later confirmed court report in October. The report said the cryptocurrency lender lost nearly $190 million in the Terra collapse and later deleted thousands of documents related to their investments to hide their exposure.
Hodlnaut was able to keep his exposure to USTC under wraps for nearly three months after the collapse of the Terra ecosystem, but eventually fell victim to a liquidity crisis that forced him to file for a court order in which the court appointed a new interim CEO of the firm. Three months on, its directors now face a police investigation for keeping users in the dark.
In August, the crypto lender said it was working on a restructuring plan with hopes of resuming operations soon.