With the recent implosion of FTX and various of its affiliates, it would appear as though the overall market has put the TerraForm debacle and its own fallout in the rearview and moved on to more pressing and current matters. While the attention of many may now be elsewhere, this is not the case for customers of beleaguered exchange, Hodlnaut. Still reeling from events that occurred months ago due to its exposure to TerraUSD Classic (USTC), Hodlnaut now finds itself under investigation by local authorities.
Penal Code 1871
The issue at hand involves potentially misleading statements made by Hodlnaut, and false representation of its exposure to the TerraForm collapse. When the platform opted to halt withdrawals from its platform in August, Hodlnaut indicated that the move was taken due to issues with liquidity, and that it did not have any exposure to USTC. Months later, and these claims were found to be dubious at best, as on-chain analytics unveiled that Hodlnaut was on the hook for almost $190,000,000.
The Singapore Police Force states, “Between August and November 2022, the Police received multiple reports alleging that Hodlnaut and/or its directors had made false representations relating to the company’s exposure to a certain digital token. Arising from these police reports, the CAD is investigating Hodlnaut and its directors for possible cheating and fraud offences under Sections 417 and 424A of the Penal Code 1871.”
There is no doubt that many investors were misled, believing that Hodlnaut was on sound footing due statements issued by the platform. As a result, local authorities in Singapore, where Holdnaut is based, have now launched an investigation in to the platform, requesting any who feel they have been defrauded by the platform to contact them.
While it would appear as though Hodlnaut lied about its exposure to TerraForm earlier in the year, the exchange was recently forthcoming with its exposure to FTX. Although this was a positive sign to see the company offer some transparency, it did nothing to help its financial situation with another $13,000,000+ lost.
Withdrawals Halted
It should be noted that Hodlnaut is not the only company continuing to struggle with the fallout from TerraForm and FTX. Nor is it the only company to blatantly lie to its customer base over the stability of its operations. Only recently, companies like BlockFi were assuring clients that operations were proceeding like normal, only to halt withdrawals hours later and go silent for an extended period afterwards. Heck, even FTX itself pulled a similar move.
The following is a list comprised of only a few of the companies known to have halted withdrawals due to either direct or indirect exposure to TerraForm and/or FTX. While many of these were forthcoming with their respective situations, it doesn’t change the fact that the customer base of each was/is being affect negatively.
- Gemini
- Blockfi
- Genesis
- Voyager
- Celsius
- Liquid
- SALT
- AAX
- Hodlnaut
The post Hodlnaut Under Investigation by Singapore Authorities for Potential Fraud appeared first on Securities.io.
