Hodlnaut founders hid financial documents, new Singapore court report says

Hodlnaut’s founders have been withholding financial documents from its Interim Judicial Managers (IJMs) at EY Corporate Advisors, according to a Singapore court report released on October 27.

Representing the crypto lender’s IJMs, law firm WongPartnership filed the report, which indicates that the managers will ask the Singapore High Court to compel Zhu Juntao and Simon Lee to hand over the documents. Failure to follow court orders can result in fines and imprisonment.

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

This comes just a week after the IJMs and Lee filed affidavits against each other over allegations of dishonesty.

“The IJMs have encountered significant difficulties in piecing together an accurate and complete picture of the Company’s financial position,” the latest court report states. “Among other reasons, the Company’s accounting and financial records have not been properly maintained prior to the IJMs appointment.”

The report also says that Zhu, Lee, and “certain other employees” have repeatedly been uncooperative or obstructive and prevented the IJM from “taking into possession various key books and records of the Company.”

The financial documents sought by the IJMs would help them “in understanding the affairs, business and property of Hodlnaut.” Over 1,000 files from Google Workspace were deleted after the IJMs were appointed, according to the report.

It adds that the documents include information about one of the lender’s main assets: an intercompany loan owed by Hodlnaut HK estimated to be worth S$82.4 million.

Hodlnaut’s interim judicial managers have accused the company’s founders of hiding financial documents. / Image credit: Hodlnaut

The IJMs said they were also unable to verify information about Hodlnaut’s decentralized finance (DeFi) positions, estimated to be around 71% of Hodlnaut’s assets and valued at about US$74.5 million as of October 27, 2022. The DeFi assets are spread across the Compound, Convex, Curve, and Aave V2 platforms.

Hodlnaut also has a centralized finance (CeFi) position of US$25.7 million, primarily in the FTX, Deribit, and Binance exchanges. WongPartnership estimates the crypto lender’s total assets are worth US$104 million, which includes S$3.17 million in cash, while total liabilities stand at US$377 million.

Those liabilities include US$127 million in USDC and USDT, which has been claimed by Samtrade Custodian. That company is also under interim judicial management.

The court report ends with the comments saying that because the IJMs have incomplete information, they have been unable to determine if Hodlnaut can be “rehabilitated.” The implication is that the company may face liquidation.