Singapore has launched a probe into the Hodlnaut crypto lender to investigate its operations. The Commercial Affairs Department (CAD) from Singapore is now probing if Hodlnaut has been involved in cheating and fraudulent activities. As per the law enforcement authorities, between August and November, several reports had claimed that Hodlnaut and its directors had made ‘false representations’ about the lender’s exposure to a particular digital token. The CAD is Singapore’s white-collar crime investigation unit.
The token in question remains unnamed. It reportedly refers to the USTC crypto token that was developed by Terra which collapsed quite dramatically earlier this year in May.
Following Terra’s collapse, Holdnaut had lost nearly $190 million (roughly Rs. 1,550 crore) that left its accounts high and dry.
In August, Hodlnaut had to freeze withdrawals from its platform to save its business from shutting down.
Holdnaut, as of now, has not reacted to the development.
The collapse of the Terra ecosystem — both algorithmic stablecoin UST and sister token LUNA — triggered a massive crypto sell-off leading to a crypto winter.
Terra’s collapse also prompted the high-profile meltdowns of crypto lenders Celsius and Voyager, as well as hedge fund Three Arrows Capital, and ushered even more scrutiny on crypto investing and stablecoins from regulators.
Shaktikanta Das, the governor of the Reserve Bank of India (RBI), had issued warnings against the experimenting in the crypto sector soon after Terra’s collapse.
“This [crypto] is something whose underlying [value] is nothing. There are big questions on how do you regulate it. Our position remains very clear, it will seriously undermine the monetary, financial, and macroeconomic stability of India,” the governor had said at the time.
In the market movements that followed the collapse of Terra and then FTX crypto exchange this month, over $200 billion (roughly Rs. 16,30,000 crore) were wiped off from the market, leaving the global crypto valuation currently at $828 billion (roughly Rs. 67,48,800 crore).
Several crypto companies including Lemon Cash, Genesis and Vauld had to lay off their employees to sustain their respective businesses.