By Norah ODonnell
The smallest Kingdom in Eastern Himalayas, Bhutan, has been investing measurable amounts of Bitcoin (BTC) and Ether (ETC) without informing the public. The Bhutan crypto investment was revealed in a bankruptcy filing involving crypto lending platforms BlockFi and Celsius.
The court report demonstrated that Druk managed Bhutan’s crypto assets worth $2.9 million. The report shows that the bankrupt digital lenders BlockFi and Celsius provided the Kingdom with crypto services.
Why Did Bhutan Kingdom Fail to Disclose Crypto Investments?
As per the court filing Bhutan Kingdom had mandated the Druk Holdings and Investment (DHI) to manage the crypto portfolio for the government. Druk was established in 2007 under the leadership of King Jigme Khesar Namgyel Wangchuck.
During the launching, Druk to was required to comply with the requirement of a royal charter. King Jigme tasked the Druk team to develop a unique wealth management technique for protecting the Kingdom’s assets.
The Druk group was entitled to manage homegrown assets such as hydropower plants, operation of Bhutan Airline, and support the cheesemakers in the region. As of this writing, Druk management controls the operation of more than 21 Bhutan-based companies.
Beyond this, on July 14 last year, lending platform Celsius filed for bankruptcy in an attempt to restructure. Due to ongoing bankruptcy proceedings, the crypto firm reorganization efforts have failed to materialize.
A review of Celsius Chapter 11 Bankruptcy filing revealed that the Druk withdrew more than $65 million. The report demonstrated that the Druk team deposited assets worth $18 million into the crypto firm.
The Druk team was listed as an institutional investor on the Celsius platform. The Celsius management issued a 14000 paged report during the bankruptcy filing containing the list of customer and creditors’ confidential data. The Bhutan investment unit was listed as Druk Project Fund in the Celsius bankruptcy report.
BlockFi and Celsius Bankruptcy Filing
A separate report from the BlockFi team revealed that the Druk owed the lending platform crypto assets amounting to $30 million as of March 2023. The BlockFi report demonstrated that the Kingdom had borrowed 30 million USD coins (USDC) pegged to the US currency.
The BlockFi counsel stated that Druk failed to settle the loan as agreed. Druk was accused of breaching loan agreements by failing to pay an outstanding balance of $820 000 after BlockFi had liquidated collateralized digital assets worth 1888 BTC.
Responding to the BlockFi claims, Druk’s chief executive Ujjwal Deep Dahal argued that the matter was resolved. Dahal reported that the BlockFi matter was confidential.
Surprisingly, the Bhutan asset management arm has been secretly engaging in crypto activities since 2022. The operation of Druk has created embroiled debates among the Bhutan nationals.
Nevertheless, the Bhutan Royal Monetary Authority (RMA) partnered with Ripple in 2021 to develop the country’s digital currency. The Ripple team was tasked to support the Kingdom’s launch the central bank digital currency (CBDC) experimentation.