Former Hodlnaut Chief Executive Faces Fraud Charges Over Terra Collapse Disclosures
Zhu Juntao, the former chief executive of Hodlnaut, faces six fraud charges in Singapore after authorities allege he made false statements regarding the crypto platform's involvement with the Terra/UST ecosystem collapse.
Zhu Juntao, who previously served as chief executive of Hodlnaut, has been formally charged in Singapore with six counts of fraudulent misrepresentation, related to claims that both Zhu and his employees allegedly made following the Terra ecosystem's catastrophic failure in 2022.
According to Singapore Police, the 36-year-old Zhu received charges after an inquiry conducted by the Commercial Affairs Department and is now facing three charges under Section 424A(1)(a) read with Section 424A(3) of the Penal Code 1871, along with an additional three charges under the identical provision read with Section 109.
The prosecution's case focuses on purportedly deceptive claims regarding Hodlnaut's involvement with the TerraUSD (UST) collapse, with allegations that Zhu instructed his team members to publish several of these statements.
According to police allegations, Zhu reportedly encouraged Hodlnaut staff members to disseminate misleading information through the company's official Telegram channel and via email communications to certain users during the May to July 2022 period, claiming that the platform had no direct involvement with UST and had incurred no losses from its implosion.
According to the police announcement, Zhu also shared three comparable posts through his personal Twitter profile, currently rebranded as X, during June 2022. Should he be found guilty, he could receive a sentence of up to 20 years imprisonment, monetary penalties, or both punishments, for each individual charge.
These charges bring renewed attention to one of the most catastrophic events during the 2022 cryptocurrency market downturn. The collapse of the Terra ecosystem occurred in May 2022 after its algorithmic stablecoin UST failed to maintain its one-to-one dollar peg, eliminating roughly $50 billion in market capitalization and contributing to cascading failures throughout the cryptocurrency lending industry.
Hodlnaut's collapse and liquidation
Hodlnaut, a cryptocurrency platform based in Singapore that enabled users to earn yield by depositing digital tokens, had accumulated over 30,000 users globally before its operations ceased in August 2022 due to severe financial challenges, as reported by police authorities.
The platform suspended withdrawal services in August 2022, and its current website indicates that its operations, business activities and assets are under the control of court-designated liquidators.
Additional cryptocurrency lending platforms, such as Celsius Network and Voyager Digital, similarly filed for bankruptcy protection during 2022 following the Terra catastrophe and an overall market downturn, resulting in hundreds of thousands of users being unable to access their funds.
Celsius had disclosed assets exceeding $10 billion prior to its failure, whereas Voyager's Chapter 11 bankruptcy petition indicated assets and liabilities ranging between $1 billion and $10 billion.
Cointelegraph contacted Hodlnaut's court-designated liquidators, but they had not provided a response to a comment request at the time of publication.