After months of back and forth with the Singapore Police Force (SPF), Hodlnaut is finally under investigation.
On Wednesday, the Commercial Affairs Department (CAD) announced it is launching an investigation into the crypto staking platform and its directors for fraud offences.
Co-founded by Juntao Zhu and Simon Lee in 2019, Hodlnaut was a platform where users could earn interest on cryptocurrencies that they deposit.
While the company said user funds were being safely lent out to carefully selected institutions, between August and November this year, SPF had received multiple reports alleging Hodlnaut had made false representations of its exposure to LUNA.
Hodlnaut had also been engaged in two legal proceedings: 1) Hodlnaut’s application to be placed under interim judicial management and subsequently judicial management. 2) A judicial review application against orders made by SPF that direct Hodlnaut to hand over funds.
The police demanded Hodlnaut hand over US$127,245,996 worth of USDC and USDT from the account under Samtrade Custodian Limited.
The SPF has now said the CAD is investing Hodlnaut and its directors for offences under Sections 417 and 424A of the Penal Code 1871. Under 417, the minimum penalty is “imprisonment for a period of up to 3 years and a fine, or either’ and those guilty under 424A could face up to 20 years in prison, a fine, or both.
SPF is also encouraging those who were defrauded through Hodlnaut to lodge a police report. Any documents showing transactiosn with Hodlnaut could help the police assist people with their complaints.
Hodlnaut halted withdrawals without warning on 8 August, one day before Singapore National Day and applied to the Singapore High Court to be placed under judicial management.
In October, it was revealed that Hodlnaut suffered a loss of almost US$190 million due to its exposure to LUNA despite claiming on a Discord server that it had zero exposure.