Hodlnaut, a crypto lending platform based in Singapore, faces an uncertain future as the High Court of Singapore recently ordered its liquidation, marking the end of its judicial management period.
This decision, which came in response to an application filed by the company, has left users’ funds frozen since August 2022.
Former interim judicial managers (IJMs) of Hodlnaut, Aaron Loh Cheng Lee and Ee Meng Yen Angela, have been discharged from their positions and appointed as liquidators, according to a letter dated November 10th posted on the EY website.
The exact details of the court’s decision remain sealed.
The troubles for Hodlnaut began in August 2022 when the company suspended deposits and withdrawals, simultaneously withdrawing its licensing application from the Monetary Authority of Singapore.
The reason cited was the impact of “recent market conditions.” With approximately 17,000 users, Hodlnaut’s creditors included prominent entities such as Samtrade Custodian, S.A.M. Fintech, and the Algorand Foundation.
Hodlnaut’s struggles were exacerbated by the broader industry turmoil, including the collapse of the Terra ecosystem and Three Arrows Capital (3AC).
Although Hodlnaut was not directly exposed to 3AC, it held around $150 million in Terra’s stablecoin, later renamed TerraUSD Classic (USTC). Another blow came with the collapse of FTX.
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To avoid forced liquidation, Hodlnaut sought court-appointed IJMs, which led to creditor protection and an 80% reduction in staff.
Additionally, the company faced a police investigation regarding delays in reporting its USTC holdings.
In earlier attempts to salvage the situation, creditors rejected a restructuring plan in January and voted overwhelmingly for liquidation in April.
In August 2023, OPNX, founded by former 3AC figures Su Zhu and Kyle Davies, offered $30 million worth of its FLEX token in exchange for a 75% share in Hodlnaut.
Unfortunately, the offer was declined by the IJMs in the following month, as the value of FLEX plummeted by 90%.
This development stands in contrast to a recent U.S. court decision that approved the bankruptcy plan of another crypto lender, Celsius, on November 9th.
Hodlnaut’s fate remains uncertain as it moves forward with the liquidation process, leaving users and creditors waiting for resolution in the wake of this challenging chapter in the world of cryptocurrency lending.
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