Key Takeaways
- Hodlnaut has revealed that the Singapore Police Force demanded money via a transfer order in July.
- That transfer order concerns $127 million in an account belonging to one customer, Samtrade Custody.
- Though events came to a head this summer, police have been involved in the case since December 2021.
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Hodlnaut revealed today that the Singapore Police Force had issued a transfer order that could exhaust its accounts.
Singapore Police Demand $127 Million
Singapore police are demanding money from Hodlnaut.
In its latest update, Hodlnaut revealed that the Singapore Police Force (SPF) issued a transfer order against it on July 14.
That order demands that Hodlnaut surrender $127 million of stablecoins from an account belonging to Samtrade Custodian, a customer “contractually onboarded with Hodlnaut Hong Kong.”
Hodlnaut says that it will have “no assets left” to carry out its recovery plan under judicial management if it complies with the order. Compliance could also force the company to shut down through liquidation, leaving it unable to pay users.
As such, the firm has applied for judicial review in an attempt to quash the order. It filed that application on July 27.
Proceedings Began In December
Police proceedings on this matter have been ongoing since December 2021. At that time, Singapore police seized assets directly from Samtrade Custody as part of a larger case.
At that time, Hodlnaut had $117 million of Samtrade’s assets in custody. Police instructed Hodlnaut to keep Samitrade’s account operating normally while disallowing withdrawals. The firm was also told “not to tip off Samtrade Custodian in any way.”
Between January 29 and July 14, Samtrade continued to make deposits to its account with Hodlnaut.
On July 14, Singapore Police arrived at Hodlnaut’s offices with a transfer order. The order told Hodlnaut to transfer $127 million of USDC and USDT held by Samtrade to a police-held wallet address. It only transferred $10 million of that amount.
On July 22, Hodlnaut was asked to unwind all positions in Hodlnaut Group by July 27 and create a repayment plan for any assets that could not be unwound and paid to the police.
Hodlnaut’s lawyers instead requested a return of the $10 million already transferred; that request was rejected by the police. Lawyers also requested a temporary delay of the transfer order.
On July 27, police asked Hodlnaut to confirm that it would deny withdrawal requests from depositors and take steps to preserve its remaining assets. This seems to be one factor in the firm’s decision to halt withdrawals on August 10.
This led to the company’s July 27 filing, which will contest the police force’s demands through judicial review.
Hodlnaut Acknowledged Police Last Week
Hodlnaut acknowledged that it was involved in proceedings with the Singapore Police Force last week on August 19. It said that it was “unable to disclose any information” at that time.
Despite the apparent severity of its proceedings with police, the company clarified today that it is “not the subject of any investigations by the Singapore Police Force.”
Events have led to the current situation: two sets of legal proceedings running in parallel. The first focuses on the Singapore Police Force’s transfer order, as described above.
In the second set of proceedings, Hodlnaut aims to secure a judicial manager that will aid it in its recovery plan.
The company reported today that its requested interim officer, Tam Chee Chong, has been rejected. The court will instead appoint three other managers to the role.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
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