Hodlnaut’s IJM application hits a snag with Samtrade involvement

EMBATTLED crypto platform Hodlnaut’s interim judicial management (IJM) application has hit a snag as a creditor objects to their choice of judicial manager.

In an update on Tuesday (Aug 23), Hodlnaut’s application to the court asked that Tam Chee Chong, director at Kairos Corporate Advisory be appointed as interim judicial manager. However, the judicial managers of Samtrade Custodian and SAM Fintech objected to the proposed candidate.

Hodlnaut has an outstanding liability of US$283 million of which US$117 million belongs to Samtrade Custodian, according to an affidavit by Samtrade’s judicial manager. This represents 41.3 per cent of the total liability. 

Instead, the judicial managers representing Samtrade proposed to appoint 3 judicial managers from Grant Thornton. They are Rajagopalan Seshadri, Paresh Jotangia and Ho May Kee, partners at the insolvency practice at Grant Thornton.

The judicial managers of Samtrade Custodian and S.A.M. Fintech did not object to the interim judicial management application.

The 2 companies are part of trading platform Samtrade FX, which was placed under judicial management on Feb 11, 2022, following a probe by the Singapore authorities into potential offences under local securities laws. The Monetary Authority of Singapore and the Commercial Affairs Department had revealed that 3 men aged between 31 and 36 have been arrested in connection with the probe on 3 Jan 2022.

According to a separate affidavit filed by Hodlnaut founder Zhu Juntao, the CAD had sent a seizure order for Samtrade’s account with Hodlnaut on Dec 29, 2021. The crypto platform had disallowed withdrawals from the account on the same day. Complying with the direction of CAD, Hodlnaut refrained from communicating with Samtrade in respect of the seizure orders and continued deploying assets as per normal.

But the crypto platform’s deployment of assets represented a risk of devaluation, which materialised with the implosion of the cryptocurrency UST. On Jul 14, 2022, CAD officers ordered the transfer of cryptocurrency worth approximately US$10 million into the Singapore Police Force’s wallet.

Zhu claimed in the affidavit that if Hodlnaut had made this transfer, the platform would have become insolvent as its assets were valued at S$125 million and total liabilities at S$389 million as of Jul 21, 2022.

Hodlnaut is seeking to quash the transfer orders by CAD, as doing so would empty out the crypto platform’s cryptocurrency assets, with none left to repay roughly 17,000 creditors.

The Court has adjourned the hearing of the IJM to Aug 26.