Bhutan’s Druk Holding and Investments (DHI), the sovereign investment arm of the Kingdom of Bhutan, has been revealed to have invested millions of dollars in cryptocurrencies, including being a customer of now-bankrupt crypto firms BlockFi and Celsius, according to a report by Forbes. The funds came to light after the crypto contagion in 2022, when both Celsius and BlockFi filed for bankruptcy.
Celsius, a prominent crypto lending platform, filed for Chapter 11 reorganization in July 2022 and has been dealing with bankruptcy proceedings since then. BlockFi, on the other hand, filed for bankruptcy in November 2022 after being affected by the collapse of the FTX exchange. These high-profile bankruptcies have raised concerns about the stability and risks associated with the crypto industry.
The report revealed that DHI withdrew over $65 million and deposited almost $18 million in crypto, as shown in a filing by Celsius. BlockFi has filed a complaint against DHI, alleging that the fund defaulted on its $30 million loan in March and refused to repay it in full after liquidating the collateral, which was 1,888 Bitcoin worth $76.5 million at the time. DHI CEO Ujjwal Deep Dahal acknowledged the issue but stated that it was confidential and that the “matter with BlockFi has been settled,” without providing further details.
DHI’s crypto investments has raised questions about the lack of transparency in the management of the country’s sovereign wealth. Bhutan is known for its unique approach to measuring national well-being through a metric called Gross National Happiness (GNH), which prioritizes social and environmental factors over economic growth. However, the investment of millions of dollars in cryptocurrencies, a highly speculative and volatile asset class, has raised concerns about the risks and potential negative impacts on the country’s economy and financial stability.
The situation also highlights the challenges and risks associated with the nascent metaverse and crypto sector. The crypto contagion in 2022 resulted in the bankruptcy of several high-profile crypto firms, raising questions about the regulatory environment, investor protection, and overall stability of the crypto industry. As governments and regulators around the world grapple with how to regulate and manage the fast-growing crypto market, incidents like DHI’s investments in cryptocurrencies highlight the need for transparency, accountability, and risk management in the crypto space.
It remains to be seen how Bhutan’s sovereign investment arm will manage its crypto portfolio going forward. As the crypto industry continues to evolve and attract attention from investors and regulators, it is crucial for stakeholders to prioritize transparency, risk management, and responsible investment practices to ensure the stability and sustainability of the market. Meanwhile, Bhutan’s unique approach to measuring national well-being through GNH may face scrutiny as questions arise about the country’s investment decisions in the crypto space.