Former Hodlnaut CEO Zhu Juntao now faces fraud charges for allegedly deceiving users about the platform’s exposure to TerraUSD during the 2022 crisis. Prosecutors said he now faces six criminal accusations, each with a possible penalty of 20 years in jail.
What Prosecutors Say Zhu Did
The Singapore Police Force stated that, after an investigation by the Commercial Affairs Department, authorities charged Zhu on May 26 with six counts of fraud by false representation. They brought three counts under Section 424A(1)(a) read with Section 424A(3) of the Penal Code and three further counts under the same clause read with Section 109 for abetment.
The argument centers on the weeks following TerraUSD’s May 2022 loss of its dollar peg. Between May and July 2022, Zhu allegedly wrote or directed “misleading statements” on Hodlnaut’s official Telegram channel, in emails to customers, and on his personal Twitter account, then known as X, police say. The texts allegedly said Hodlnaut had “no direct exposure to UST” and “did not suffer losses” from the crash.
However, later court filings and an interim judicial manager’s report said Hodlnaut actually lost around $190 million in the Terra ecosystem, contributing to a roughly $193 million hole in its balance sheet. The platform paused withdrawals in August 2022, sought creditor protection soon after, and ultimately entered liquidation, leaving more than 30,000 users worldwide with trapped funds.
Terra Losses And Possible Jail Time
Singapore police say Zhu made the alleged misstatements during “the most critical period” of Hodlnaut’s deterioration, when users were deciding whether to keep funds on the platform. Investigators claim Zhu not only posted his comments but also instructed employees to reassure customers that Hodlnaut had not taken a hit from the UST meltdown.
In its official statement, the Singapore Police Force said it charged Zhu, 36, in court “for fraud by false representation” after the probe into Hodlnaut’s Terra exposure. The agency added that each count carries a possible sentence of “imprisonment for a term which may extend to 20 years, a fine, or both.”
Local media reports that Zhu has indicated he will contest the charges, and observers expect the case to test how Singapore applies its fraud laws to crypto platforms that offered yield products tied to risky assets such as TerraUSD.
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