The Singapore High Court has ordered cryptocurrency lending platform Hodlnaut to undergo liquidation, as stated in a court document dated November 10. Aaron Loh Cheng Lee and Ee Meng Yen Angela, both from corporate advisory firm EY, have been appointed as the joint liquidators for Hodlnaut. This decision follows their initial appointment as interim judicial managers on August 29 to oversee the struggling startup.
The Collapse and Disclosure Issues
Hodlnaut suffered substantial losses amounting to approximately $190 million due to its investments in the Terra ecosystem, which experienced a significant collapse. A judicial report revealed that the company’s directors had not fully disclosed the extent of their involvement with the Terra/Luna platform before and after its downfall in May 2022. This situation put Hodlnaut in a similar position to other financial entities such as Celsius, Voyager Digital, and Three Arrows Capital, which also faced setbacks due to their association with Terra’s algorithmic stablecoin UST.
User Deposits and Uncertain Prospects
Prior to its liquidation, Hodlnaut offered depositors interest rates as high as 12.73%. However, with the platform now facing liquidation, the prospects of users recovering their deposits remain uncertain. The liquidators have acknowledged that addressing individual queries may not be feasible due to the large volume of creditors. Instead, they plan to provide bulk updates online to keep stakeholders informed.
A number of potential buyers have expressed interest in acquiring the embattled cryptocurrency lending company and its claims against the now-bankrupt digital asset exchange FTX. Various parties reached out to the interim judicial managers overseeing Hodlnaut earlier this year after the company sought protection from creditors.
As of December 9, Hodlnaut Group owed a combined $160.3 million, which accounts for more than 60% of the company’s outstanding debt, to major crypto and fintech companies like Algorand Foundation, Samtrade Custodian, S.A.M. Fintech, and Jean-Marc Tremeaux.
In August, OPNX, a digital asset exchange created by the founders of failed hedge fund Three Arrows Capital, proposed a takeover of the struggling crypto lender Hodlnaut. OPNX offered to inject $30 million worth of FLEX digital tokens into Hodlnaut to fund a partial creditor payout. However, the offer was submitted to the court after the interim judicial managers overseeing Hodlnaut’s restructuring objected to the distressed firm’s directors emailing the bid directly to its users.
