A court report said that the crypto lender’s directors “played down” how much risk the company had in the Terra ecosystem.
A legal report is said to have shown that Hodlnaut lost about $189.7 million because of its exposure to the Terra crash.
Bloomberg says that the report, which was written by interim judicial managers hired by the Singapore High Court, says that Hodlnaut’s directors “downplayed the group’s exposure to Terra/Luna both before and after Terra/collapse Luna’s in May 2022.”
The Singapore-based company, which was started in 2019, joins companies like Celsius, Voyager Digital, and Three Arrows Capital, which also lost a lot of money because they were involved with the Terra ecosystem and its doomed algorithmic stablecoin, UST.
The company stopped letting people take money out in July 2022, citing “current market conditions” and a desire to stabilize its cash flow and “preserve assets.”
In August, the Singapore High Court chose Ee Meng Yen Angela and Aaron Loh Cheng Lee, both of whom work for EY Corporate Advisors, to be interim judicial managers (IJMs).
Bloomberg’s report also said that more than 1,000 deleted documents from Hodlnaut’s Google Workspace could have helped explain the business. However, the interim judicial managers have not been able to get “key documents” from the Hong Kong branch of the company, which owes about $58 million to the Singapore branch.
The company’s financial problems haven’t just hurt investors. Shortly after closing withdrawals, Hodlnaut fired 80% of its staff, or about 40 people, “to cut the company’s expenses.”
Hodlnaut and its administrators have had a rough time getting along. Simon Lee, the founder of Hodlnaut, asked the Singapore High Court to remove EY as its IJM earlier this month. He said that the multinational consulting firm was not being honest.
Singapore’s government and cryptocurrency
In the wake of the failure of several well-known lenders, Singapore may soon tighten its rules on crypto lending and staking, at least for small investors.
In a new report, the Monetary Authority of Singapore (MAS) says that digital asset service providers “should not mortgage, charge, pledge, or hypothecate the retail customer’s” crypto. Hypothecation means using an asset as collateral for a loan.
But that’s not the only thing the Asian city-state has done to keep investors from losing money in the future.
Before they can buy or sell digital assets, people who want to invest may also have to pass a test of their knowledge to see if they understand risks like market volatility and technology failures.