Hodlnaut Downplayed TerraUSD/LUNA Exposure

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  • Hodlnaut played down its exposure to the TerraUSD/LUNA crash
  • The platform lost $190 million but only told police in July
  • The company’s Hong Kong arm seems to have been behind the investment

Singapore-based cryptocurrency exchange Hodlonaut downplayed its exposure to the TerraUSD/LUNA collapse, according to an interim judicial managers’ report. The report, seen by Bloomberg, says that Hodlnaut suffered a $190 million loss but hid the level of damage from its customers, making an “about-turn” and informing the Singapore police department of the loss after investigations into its affairs had been started.

Hong Kong Arm Invested in TerraUSD

Hodlnaut froze user withdrawals in August, just weeks after the TerraUSD/LUNA collapse wrought chaos within the cryptocurrency sector. At the time it didn’t divulge any exposure to Do Kwon’s fallen empire, something that the report explained:

It appears that the directors had downplayed the extent of the group’s exposure to Terra/Luna both during the period leading up to and following the Terra/Luna collapse in May 2022.

The Hong Kong arm of Hodlnaut’s operations suffered the near $190 million loss when it offloaded the TerraUSD stablecoin as its dollar peg collapsed, sending much to Anchor protocol in order to claim double-digit interest. 

The company made an “about-turn” on July 21 regarding the impact of the crash, informing the Singapore police department of its actions, but the public is only finding out now thanks to the interim judicial managers’ report being leaked to Bloomberg.

Thousands of Documents Deleted

As well as holding back from informing investigators about the loss, Hodlnaut employees also deleted more than 1,000 documents from its Google workspace which could have helped shed light on the state of the business.

This has led to judicial managers being unable to locate several “key documents” regarding Hodlnaut’s Hong Kong arm, which owes S$82.43 million ($58.3 million) to the parent company, Hodlnaut Pte.