Hodlnaut accuses EY staff of dishonesty; EY fires back

The fight for control of Hodlnaut, the Singapore-based crypto lender that lost US$193 million in the UST collapse in May, is heading back to court, with both the company’s founders and its current interim judicial manager (IJM) Ernst & Young (EY) hurling allegations.

Hodlnaut co-founder Simon Lee has signed an application asking the Singapore High Court to replace the company’s IJM, claiming that EY has been unfairly prejudicial in its handling of the case.

Photo credit: Hodlnaut

Ee Meng Yen Angela and Aaron Loh Cheng Lee, the executives managing the IJM for EY, fired back, saying Lee is trying to avoid personal liability and has been obstructing EY’s efforts to recover documents.

Lee is also a creditor of Hodlnaut. He claims that he is owed S$3 million in crypto assets held by the company.

In papers released to creditors on October 21 by EY on the order of the court, Lee focused on EY’s dismissal of Damodara Ong, Hodlnaut’s former lawyers, on September 2, despite assurances that the firm would be retained.

According to a transcript of the recorded conversation, Richard Gardner, director of turnaround and restructuring strategy at EY, told Hodlnaut founders Lee and Zhu Juntao that Damodara was sacked because there seems to be “some bad blood” between the Attorney-General’s Chambers (AGC) of Singapore and the law firm. “That’s … the clear message that we got from the AGC,” Gardner added.

He also told Lee and Zhu that the AGC didn’t want Hodlnaut “to be represented by Damodara going forward, because … they see that firm as being aligned with directors.”

In Lee’s words, Gardner also told him and Zhu that the settlement of the IJM was “conditional on Damodara not being Hodlnaut SG’s lawyers.”

In the transcript, Zhu responded by saying “that’s not the truth.” In the affidavit, both he and Lee stated that they found it hard to believe that “the AGC, as civil officers and state counsel [could] be so ‘petty’ and to make decisions based on whether they like the opposing counsel or not.”

Zhu Juntao, CEO and co-founder of Hodlnaut / Photo credit: Hodlnaut

Loh of EY’s IJM team later disputed Lee’s characterization of the conversation, claiming that the quality of the audio recording was bad, and that Gardner had in fact clarified that he didn’t know for sure if AGC had an issue with Damodara.

Alleged conflict of interest

Lee’s affidavit also alleges that EY’s appointment of WongPartnership, a law firm known in Singapore and Malaysia for handling IJMs, to replace Damodara, created a conflict of interest.

EY fires back