The landlocked Himalayan country of Bhutan has been said to be secretly investing millions of dollars in Bitcoin (BTC) and other cryptocurrencies. The bankruptcies of lenders BlockFi and Celsius have made the company’s investments public, which had previously been kept secret from the general public.
Based on court records, Bhutan’s $2.9 billion national investment arm, Druk Holding & Investments, was a client of insolvent crypto lenders BlockFi and Celsius, according to documents revealed in a Forbes report on April 15.
Druk Holding & Investments is responsible for managing a portfolio consisting of domestic assets; nevertheless, since at least 2022, Druk has also been cultivating a crypto portfolio in secret. It was accidentally disclosed in the aftermath of the crypto contagion that occurred last year, which resulted in the failure of a number of businesses, including FTX and Voyager.
Druk was accused of defaulting
Over the course of the three months covered by the Celsius filing, Druk withdrew over $65 million and deposited approximately $18 million in digital assets.
A complaint was handed over to Druk in Thimphu, Bhutan’s capital city and the residence of the country’s royal family, by attorneys for BlockFi, a company that declared bankruptcy in November, only a few days after FTX did so. BlockFi is making the accusation that the fund has failed to return a loan of $30 million that it received.
According to the claim, in February 2022, Druk agreed to borrow 30 million USD Coin, which is a stablecoin whose value is tied to that of the US dollar. However, according to BlockFi’s allegations, Druk “failed and refused” to return the loan in its entirety. This was the case even after the lender liquidated collateral of 1,888 Bitcoin, which had a value of $76.5 million at the time of the loan. This left an outstanding debt of $820,000.
What’s more, over 14,000 pages of user information, including names, addresses, and financial activities, were made public by Celsius in October. Between April and June of 2022, Druk Holding & Investments, together with an account titled “Druk Project Fund,” performed dozens of transactions, including deposits, withdrawals, and borrowing of Bitcoin, Ethereum, Tether, and a few other cryptocurrencies, as shown by the transaction logs.
Druk withdrew about $65 million and deposited approximately $18 million in digital assets during the three months covered by the Celsius filing.
Sovereign wealth fund uncertainty over crypto
If Druk decided to invest tens of millions of dollars in cryptocurrency, it would be an unusual move for the holding firm, which is supposed to encourage domestic business projects. It would seem to be the first national wealth fund to acquire cryptocurrency if it is actually what it claims to be direct.
Interestingly, this is not the first cryptocurrency and Bhutan have been mentioned in the same sentence together, back in 2021, Finbold reported that Ripple inked a collaboration with Bhutan’s central bank, the Royal Monetary Authority (RMA). The deal aimed to conduct a pilot project to facilitate cross-border and wholesale payment through a CBDC solution.
