Bhutan's Sovereign Wealth Fund Revealed to Have Crypto Holdings, Faces Legal Challenges

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Bhutan's sovereign investment arm, Druk Holding & Investments, has invested millions of dollars in bitcoin, ether, and other digital assets, according to court documents reviewed by Forbes.

Established in 2007, Druk Holding & Investments is often described as the Himalayan kingdom's sovereign wealth fund, and manages a portfolio of homegrown assets, including a local cheesemaker, hydropower plants, and an airline.

The US$2.9 billion fund was a customer of bankrupt crypto lenders BlockFi and Celsius, which it has never publicly disclosed, and is accused by BlockFi of defaulting on a $30 million loan.

According to the claim, Druk borrowed US$30 million in stablecoin USDC, but “failed and refused” to repay the loan in full, even after the lender liquidated a collateral of 1,888 bitcoin (worth $76.5 million at the time of the loan), leaving an unpaid balance of $820,000.

Druk has not commented on the allegations or how its crypto holdings were acquired. Forbes noted that its investments in crypto would mark a surprising move for a holding company focused on promoting domestic ventures.

Wealth managers have speculated for years about government-backed funds buying cryptocurrency, but so far, the only known links have been through these funds buying stakes in companies that own crypto.

Druk was previously outed as an institutional customer of Celsius, which filed for Chapter 11 bankruptcy in July 2022. The investment firm, as well as an account called the “Druk Project Fund,” was named in a 14,000 page document of customer addresses and transactions, released by Celsius in October 2022. The accounts were involved in trades between April and June 2022 that included depositing, withdrawing and borrowing bitcoin, ether, tether and several other cryptocurrencies. In the three months shown in the Celsius filing, Druk withdrew more than $65 million and deposited nearly $18 million in digital assets.

Bhutan, known for its focus on wellbeing over economic growth and its Gross National Happiness Index, has shown interest in blockchain technology and crypto, hosting a panel of blockchain advocates in 2020 and working with Ripple to pilot a central bank digital currency (CBDC) in 2021.

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