Evaluating only Hodlnaut’s profile at its peak — without knowing the outcome — the model ranked Fraud as the #1 likely cause. That’s exactly how it died.
Key Events Timeline
FOUNDING
Hodlnaut founded
FRAUD EXPOSURE
Fraud allegations surface
SHUTDOWN
Fraud Explosion: Hodlnaut ceases operations
Full Analysis
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Documented cause
Hodlnaut was a Singapore-based crypto lending platform that offered high yields on cryptocurrency deposits. Unknown to its users and regulators, Hodlnaut had deposited approximately $190 million into Anchor Protocol on the Terra/Luna ecosystem, which offered an unsustainable 19.5% APY. When Terra/Luna collapsed in May 2022, Hodlnaut lost the majority of those funds. Rather than disclosing the losses immediately, the founders deleted references to Anchor Protocol from their website and Telegram channels in May 2022 while continuing to accept new deposits. In August 2022, Hodlnaut suspended withdrawals trapping approximately $190 million belonging to 17,000 users. Singapore police arrested the two co-founders in September 2022 on criminal charges including cheating and fraud by false representation.
Alternative account: Hodlnaut offered cryptocurrency savings accounts with yields up to 7.25% APY, building a base of approximately 17,000 customers across Singapore and internationally. The company had significant exposure to TerraUSD (UST) and the Anchor Protocol when the Luna/Terra ecosystem collapsed in May 2022. Hodlnaut lost an estimated $190M in the collapse. The company froze withdrawals in August 2022 and applied for judicial management in Singapore. Criminal investigations were opened into the founders for allegedly withholding the extent of the Luna exposure from authorities.
Lesson
“The moment you hide a loss from users who are still depositing money, you have crossed from failure into fraud. The cover-up is always worse than the original mistake.
Alternative account: Before deploying customer assets into a yield source, understand the full dependency chain. If any link in the chain is an algorithmic mechanism with no floor, the entire chain is algorithmically breakable.”