Bhutan held millions of dollars worth of crypto in BlockFi and Celsius

Bhutan, a small country in the Himalayas known for its happiness index and isolation from the world, has secretly been investing in cryptocurrency for over a year.

This was revealed by the bankruptcy filings of two crypto lending platforms, BlockFi and Celsius, which had Bhutan’s sovereign investment fund as a customer.

Bhutan borrowed and deposited crypto in BlockFi and Celsius

According to a Forbes report, Druk Holding & Investments, which manages Bhutan’s national assets and wealth valued at $2.9 billion, borrowed and deposited millions of dollars worth of bitcoin (BTC), ether (ETH), and other digital coins with BlockFi and Celsius.

Per the report, the fund never disclosed its crypto activities to the public or its shareholders, the people of Bhutan.

King Jigme Khesar Namgyel Wangchuck, the ruler of Bhutan, established Druk through a royal charter in 2007 to grow and oversee the reclusive Asian kingdom’s wealth.

The fund is named after the country’s national symbol, the fabled thunder dragon. It manages a diverse portfolio of 21 Bhutan-based companies, ranging from a local cheese maker to hydropower plants to the national airline and everything in between.

Crypto bankruptcies expose Bhutan’s involvement

Druk’s crypto portfolio was exposed when Celsius Digital and BlockFi went bankrupt in June and November 2022, respectively, following the collapse of the crypto market and the regulatory crackdown on the industry in the U.S.

BlockFi is suing Druk for defaulting on a $30 million loan in USD Coin (USDC), a stablecoin pegged to the U.S. dollar. Celsius also claims that Druk owes it money and assets.

While the country has been pursuing modernization initiatives, such as a digital identity system that uses biometrics and blockchain technology, it is unclear why Druk decided to venture into the volatile and risky crypto space or whether it had any approval from the king or the government of Bhutan.

According to Forbes, Druk has been building a hidden crypto portfolio since at least 2022. However, it was accidentally exposed in the aftermath of last year’s crypto epidemic, which witnessed the failure of multiple organizations, including Celsius and BlockFi.

The publication claimed that BlockFi lawyers filed a complaint against Druk in Thimphu, Bhutan’s capital, last month.

The fallen crypto firm has accused Druk of failing to fully repay a $30 million loan it borrowed in February 2022.

The sovereign fund had also previously been identified as an institutional customer of Celsius, which filed for Chapter 11 bankruptcy in July 2022, citing poor investments and a market slump.

According to a document comprising over 14,000 pages of user data Celsius published last year, Druk Holding, as well as an account named the “Druk Project Fund,” executed a slew of trades between April and June 2022, depositing, withdrawing, and borrowing BTC, ETH, USDT, and a few other cryptocurrencies.