Ex-CEO of defunct crypto platform Hodlnaut charged with fraud for allegedly lying to users about losses

The former Chief Executive Officer of the now-defunct cryptocurrency platform, Hodlnaut, Zhu Juntao, was charged in court on May 26 with fraud by false representation.

According to a police news release, Hodlnaut was an online platform that allowed users to deposit digital tokens in exchange for interest.

It reportedly had more than 30,000 users worldwide before ceasing operations in August 2022, following financial difficulties.

Zhu faces six charges in total — three under Section 424A(1)(a) read with Section 424A(3) of the Penal Code 1871, and three under the same provision read together with Section 109 of the same code.

The charges relate to alleged false statements made between May and July 2022, during which time the TerraUSD (UST) "stablecoin" suffered a sudden and dramatic price collapse.

The charges

Following the UST crash in early May 2022, Zhu allegedly directed Hodlnaut employees to make misleading statements through the company's official Telegram group chat and in emails sent directly to some users, claiming that Hodlnaut had no direct exposure to UST and had not suffered losses from its collapse.

Zhu also published three posts on his personal Twitter account, now known as X, in June 2022 containing similar alleged claims.

According to CNA, Zhu allegedly posted:

• "Hodlnaut as a firm did not take any losses on UST, users who held/bought UST on our platform did,";
• "Missed this but had no price exposure to $UST or incurred any losses from the debacle,"; and
• "We are aware that there have been articles circulating on @hodlnautdotcom taking losses on the $UST collapse and would like to reiterate that we did not take any losses as a firm but users on our platform who held UST did."

Alleged to have instigated an employee to make misleading statements

He is further accused of instigating an employee, Goh Chang Teck, to post on Telegram that Hodlnaut had no direct exposure to LUNA or UST as a company, and that no company funds were used in those assets, sometime before May 25, 2022.

In a separate message, sometime before Jun. 28, 2022, Goh allegedly posted at Zhu's instigation that the company did not make losses and that losses were from user funds.

Zhu is also alleged to have directed another employee, Megan Lois Lau Shi May, to send an email to 30 recipients in 2022 stating that Hodlnaut did not assume any losses as a firm, but that users on the platform who held UST did.

Zhu, who indicated he was not guilty and disputed all charges, was given a pre-trial conference date in June 2026, CNA reported.

If convicted, he faces a jail term of up to 20 years, a fine, or both.

Police advisory

In their statement, the police reminded the public that cryptocurrencies are highly volatile and speculative, with no underlying fundamental value.

Investing in them carries significant risks and is not suited for most consumers.

Regulatory safeguards, they added, cannot fully protect investors from losses or the potential collapse of crypto service providers.

For more information, members of the public can visit the MoneySense website.