Uncovering Bhutan’s secret crypto holdings: What we know so far

The report stated that in February 2022, DHI took a $30 million loan in USDC from BlockFi but defaulted on repayment. Consequently, last month, BlockFi filed a complaint against DHI to reclaim outstanding debt, alleging that DHI already liquidated collateral of 1,888 BTC worth $76.5 million but “failed and refused” to pay the remaining balance of $820,000.

Moreover, court filings showed that DHI was a customer of the crypto lending platform, Celsius. According to reports, DHI made a number of trades with Celsius, withdrawing around $65 million and depositing around $18 million in crypto. More specifically, Celsius has released a 14,000-page document containing user data, which includes a Durk Project Fund named account that shows DHI dealing with a range of cryptocurrencies, such as BTC, ETH, and USDT, among others.

It is worth noting that Celsius and BlockFi were among the high-profile crypto firms that filed for bankruptcy after the FTX collapse. BlockFi had invested a significant portion of its funds in FTX, which became inaccessible once FTX became insolvent. Meanwhile, Celsius went belly up due to 'extreme market conditions' which triggered massive customer withdrawals. Celsius filed for bankruptcy on July 14, 2022, and has since been working on its restructuring plan, while BlockFi filed for bankruptcy on November 28, 2022.

Although the extent of Bhutan’s cryptocurrency is unclear, the nation made headlines in 2021 after its central bank, the Royal Monetary Authority, partnered with Ripple, the firm behind XRP, to pilot a CBDC (central bank digital currency) in phases. The deal was part of Bhutan’s broader goal of increasing financial inclusion by 85 percent by 2023.

It is difficult to comment on whether or not Bhutan’s crypto loan can be linked to the advancement of the crypto industry in the country. However, it does raise many questions about why DHI invested in cryptocurrencies, considering its primary role in the country is to promote homegrown startups and manage and safeguard national wealth. Speculators are even doubting why a sovereign wealth fund would deliberately hide its direct crypto exposure. The unexpected revelation only adds to the mystery of Bhutan’s association with crypto.