The Singapore Police Force said in a May 26 press release that Zhu Juntao, the 36-year-old former chief executive of the now-defunct crypto lender Hodlnaut, was charged with fraud by false representation after an investigation by its Commercial Affairs Department.
Founded in 2019 by Zhu Juntao and Simon Lee, Hodlnaut let users deposit cryptocurrencies to earn interest and had more than 30,000 users worldwide before it became defunct in August 2022, police said.
- The case centers on what Hodlnaut told users after the sudden collapse of TerraUSD (UST), the algorithmic stablecoin that lost its dollar peg in May 2022 and helped trigger a wider crypto lending crisis.
Police said Zhu allegedly told employees to make misleading statements in Hodlnaut's official Telegram group and in emails sent to some users between May and July 2022.
Those statements allegedly said Hodlnaut had no direct exposure to UST and didn't suffer losses from the token's crash. Zhu also allegedly published three similar posts on Twitter in June 2022.
Now, Zhu faces six charges in total. Three are tied to alleged false representations, while three include alleged abetment, police said.
If convicted, he faces up to 20 years in prison, a fine, or both, for each charge, with a pre-trial conference scheduled for June.
- A report from Hodlnaut's court-appointed managers alleged that the company lost almost $190 million because of Terra and that its directors had played down those losses before and after Terra collapsed.
- The report also found that the firm deleted over 1,000 documents from its corporate Google Workspace which could have helped shed light on the business.
- Hodlnaut suspended withdrawals in July 2022, citing "recent market conditions."
- Singapore's High Court ordered Hodlnaut to be wound up in November 2023, after the company's crypto repayment obligations were treated as debts for insolvency purposes.