Singapore’s police force has said it is investigating Hodlnaut and its directors for possible cheating and fraud violations, putting the troubled cryptocurrency lender in even more legal trouble.
According to a police statement, the investigation began on November 23 due to numerous allegations of “false representations relating to the company’s exposure to a certain digital token.”
Crypto lender Hodlnaut's legal woes intensify after Singapore police begin a probe into possible fraud https://t.co/j3GaC3chVz
— Bloomberg (@business) November 24, 2022
Hodlnaut Faces Investigation for Possible Fraud
Another cryptocurrency lender is experiencing significant difficulties. The investigation report is the latest challenge for Hodlnaut, a struggling Singapore-based exchange. The company was one of several cryptocurrency businesses that were impacted by the market collapse earlier this year.
According to multiple reports, Singapore police have launched an investigation into the tainted cryptocurrency exchange Hodlnaut.
Singapore’s police force said it’s investigating Hodlnaut and its directors for potential cheating and fraud offenses, adding to the legal perils faced by the beleaguered cryptocurrency lender https://t.co/Axm5LEBgmL
— Bloomberg Crypto (@crypto) November 24, 2022
According to reports, the police’s white-collar unit is investigating claims that the company and its directors engaged in deception and fraud. Furthermore, police advised Hodlnaut crisis-affected investors to file a complaint online and provide proof of their platform transaction histories.
Between August and November of this year, the police received numerous complaints alleging that Hodlnaut or its directors misrepresented the company’s exposure to a specific digital coin. The Commercial Affairs Department is investigating suspected offenses against the cryptocurrency lender.
After TerraUSD’s Collapse, Hodlnaut Was Stressed
The crypto lender’s first sign of trouble came on August 8 when it stopped allowing withdrawals from the platform, citing a liquidity issue. Only a few months after the infamous crypto pandemic in the second quarter, caused by the collapse of the Terra ecosystem, did the company suspend withdrawals?
The operations of the troubled crypto lender, like those of other market participants, have been put under strain during this crypto winter. According to reports, Hodlnaut has suffered a $190 million loss as a result of the Terra ecosystem’s demise. It suggests that Hodlnaut is one of the cryptocurrency lenders that faced significant difficulties in conducting business following the collapse of the TerraUSD ecosystem.
Hodlnaut has reportedly lost $190 million with the crash of the Terra ecosystem earlier this year.
— Wolf Trade (@Wolftradecrypto) November 24, 2022
The court appointed temporary judicial managers for Hodlnaut in response to a report last month that claimed the company had minimized its exposure to the destroyed Terra ecosystem. Hodlnaut also stated that “pending proceedings” with the police have been initiated.
The company stopped accepting withdrawals from its platform in August of this year and has been granted creditor protection. Furthermore, the exchange reported earlier this month that it had over SGD 18.3 million ($13.3 million) in cryptocurrency stuck on the bankrupt exchange FTX, further complicating its recovery efforts.
Increasing Regulatory Compliance in Singapore
Singapore regulators recently tightened their grip on the country’s cryptocurrency industry. It happened when the Terra ecosystem in Singapore collapsed. The Monetary Authority of Singapore (MAS) established a regulatory framework to reduce the risk that investors face when trading cryptocurrencies. Retail investors are not permitted to trade cryptocurrencies using credit cards or borrowed funds, according to the MAS.
As a result of increased regulatory scrutiny and calls for more regulation in the aftermath of the FTX collapse and the Hodlnaut fraud investigation, the free-wheeling Wild West period for digital assets may be coming to an end.
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