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Digital asset lending firm Hodlnaut has found itself in the crosshairs of Singapore’s police on allegations of fraud and misrepresentation to customers.

The police investigation is hinged upon multiple reports “alleging that Hodlnaut and/or its director had made false representations to the company’s exposure to a certain digital token.” Upon probe completion, Hodlnaut and its principal members could be dragged to court under sections 417 and 424 of the Penal Code of 1871.

Affected individuals are encouraged to file reports with the authorities if they have suffered losses as a result of the misrepresentation, police said in a statement. The complaints will form the building blocks of the prosecution’s case against the embattled virtual currency lender.

“If you have deposited digital tokens with Hodlnaut and believe that you may have been defrauded through, among others, false representations made by Hodlnaut, you may wish to lodge a police report at the nearest Neighbourhood Police Center or online,” read the police statement.

The allegations of fraud are just one in a long line of tragedies that have affected the lender. Terra’s collapse in May forced the company to pause withdrawals and deposits for customers after reporting a $193 million financial shortfall. In August, the firm withdrew its application for a license with the Monetary Authority of Singapore (MAS).

Things got progressively worse for the firm as it announced that it was laying off a chunk of its workforce to reduce expenses. Hodlnaut’s interim judicial managers revealed that most of the lenders’ assets were on centralized exchanges, with 71% being held on FTX. At the time of the disclosure, the assets on FTX were valued at $18.47 million, but it is unclear if they were liquidated before FTX’s implosion.

Singapore eyes being a digital asset hub but has no room for bad actors

Singapore’s government has disclosed its desire to turn the country into a leading global digital asset hub. Regulators have begun creating an enabling environment to lure digital asset service providers to the region as it looks to reclaim its spot in the grand scheme of things.

Despite the ambitions to transform the country’s digital economy, regulators have made it clear that virtual currency speculation has no place in the jurisdiction but notes that it is keen to explore other potential uses of the asset class.

“The most promising use cases of digital assets in financial services are in cross-border payment and settlement, trade finance, and pre-and post-trade capital market activities,” said Ravi Menon, Managing Director of MAS.

Watch: The BSV Global Blockchain Convention presentation, Trust But Verify: Everything

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