Singapore authorities have charged Zhu Juntao, the former chief executive of crypto lender Hodlnaut, with fraud related to statements the company made about its holdings of the stablecoin TerraUSD (UST). The charges, announced on Tuesday, stem from an investigation into whether Hodlnaut misled customers about its exposure to UST before the token's collapse.
Alleged misrepresentation of UST holdings
According to the authorities, Zhu is accused of making false representations about Hodlnaut's financial position regarding TerraUSD. The stablecoin, also known as UST, lost its peg to the US dollar in May 2022, triggering a broad crypto market downturn. Hodlnaut had publicly claimed that its exposure to UST was minimal, but investigators allege that the company's actual holdings were far larger, putting customer funds at risk.
The fraud charge carries a potential prison sentence of up to 10 years and a fine. Zhu was released on bail and is expected to appear in court again next month. Lawyers for Zhu did not immediately respond to requests for comment.
Company's collapse and aftermath
Hodlnaut, once a prominent lending platform in Singapore, froze withdrawals in August 2022 after suffering significant losses from its UST positions. The company later entered interim judicial management, and its assets were frozen. Thousands of users were unable to access their deposits. The charges against Zhu mark the first criminal action taken against a senior executive of the firm.
Investigators are also examining the roles of other former executives, though no additional charges have been filed. The case highlights the regulatory scrutiny facing crypto firms that made large bets on TerraUSD before its demise.
The next hearing is scheduled for early July, when Zhu's legal team is expected to enter a plea.
