The fund was found to be linked to bankrupt cryptocurrency lenders.
The investment fund of the Kingdom of Bhutan, a country in the Himalayas between China and India, invested millions of dollars in Bitcoin (BTC), Ether (ETH), and several other cryptocurrencies. According to Forbes, an examination of the fund’s financial statements revealed that the institution secretly bought crypto-assets, including from bankrupt cryptocurrency lenders BlockFi and Celsius.
Druk Holding & Investments is a state-owned investment fund. This financial institution manages $2.9 billion in assets for Bhutan. The holding company’s purchase of cryptocurrency became known after BlockFi’s cryptocurrency lenders filed a lawsuit against the fund.
Buddhist Kingdom fund defrauded lenders?
According to BlockFi’s statement, the fund defaulted on its credit facility. The bankrupt BlockFi is estimating $30 million in damages. The lawsuit states that Druk Holding & Investments borrowed the above USD coin (USDC) from the lender. USD coin is a stablecoin whose value is pegged to the dollar.
As follows from the lawsuit, the fund has not paid the debt in full. At the time the lawsuit was filed, the fund had a balance of $820,000 remaining to be paid. According to BlockFi representatives, they even liquidated a $1,888 BTC lien on the line of credit. This amount of cryptocurrency was equivalent to about $76.5 million at the time of the loan.
It is currently unclear for what purpose the fund borrowed so much in cryptocurrency. According to Ujjwal Deep Dahal, the head of the fund, the conflict with BlockFi has been resolved. He did not specify whether Druk Holding & Investments has repaid its debt.
The economy of the Kingdom of Bhutan depends mainly on tourism and agriculture. It is currently unclear how and why the fund became interested in cryptocurrencies, but this is the first time in history that a sovereign wealth fund of a state has taken to invest in crypto-assets.