After freezing withdrawals, Hodlnaut has been placed under creditor protection
August 30, 2022 10:12 PM
On August 8, Hodlnaut halted withdrawals and all other platform offers, resulting in a liquidity crisis and tumultuous market conditions.
The Singaporean court on August 29 ordered the interim receivership, or bankruptcy protection program, of Hodlnaut, a crypto lending company based in Singapore.
Three weeks after Hodlnaut stopped all trading and withdrawals on its platform due to a liquidity crisis, the court orders were issued. On August 30, the crypto lending platform announced on its official blog that Ee Meng Yen Angela and Aaron Loh Cheng Lee, care of EY Corporate Advisors, had been recruited as interim judicial managers. The blog entry stated:
"On August 29, 2022, the court issued its decision, and it was confirmed that Hodlnaut would be under interim judicial management."
The organization the crypto lender was searching for would prevent forced liquidations during a bad market. According to Singaporean law, such bankruptcy protection program enables struggling businesses to rehabilitate themselves. In accordance with this law, the court chooses a representative known as the director of justice to temporarily assume control of the organization.
Before requesting an injunction, Hodlnaut fired 80% of his staff, as Cointelegraph reported earlier this month. In order to enable users to withdraw their original cryptocurrency contributions, the firm aims to use the bankruptcy phase to return its asset-to-debt ratio to 1:1.
Before terminating accounts, users could be able to fully withdraw their initial deposits and collected interest, according to an earlier report from the cryptocurrency lender. However, this option is currently dependent on whether the newly appointed bankruptcy trustees approve it.
Hodlnaut is just one of many cryptocurrency lending businesses that were hurt by the collapse of the now-defunct algorithmic stablecoin TerraUSD Classic (USTC). A $40 billion Terra ecosystem collapsed as a result of the USTC crisis, and other crypto lending companies with USTC exposure finally went out of business.