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Hodlnaut failed to restructure and in danger of liquidation. The turbulent landscape of the digital currency industry has claimed another victim. Because Hodlnaut, a leading cryptocurrency lender, is facing imminent liquidation. The High Court of Singapore recently terminated the judicial administration of Hodlnaut, signaling an ominous fate for the company. The court order, which is now sealed, appears to determine Hodlnaut’s fate after months of financial turmoil and failed recovery efforts.
Former interim judicial administrators Aaron Loh Cheng Lee and Ai Meng Yen Angela have been removed from their duties and appointed as liquidators, as disclosed in a letter dated Nov. 10 on Ernst & Young’s (EY) website.
Hodlnaut has been struggling with frozen user funds since August 2022 when the Singapore-based company suddenly suspended deposits and withdrawals. At the same time, it withdrew its license application from the Monetary Authority of Singapore citing unfavorable market conditions as the reason for its drastic decision.
According to Lee’s letter, Hodlnaut’s creditor list includes 17,000 users. Notable creditors include Samtrade Custodian, S.A.M. Fintech and the Algorand Foundation, the latter identified a significant amount of $35 million in exposure to Hodlnaut.
The company’s woes were compounded amid widespread industry turmoil, marked by the collapse of the Terra ecosystem and Three Arrows Capital (3AC). Although Hodlnaut was not exposed to 3AC, he reportedly had approximately $150 million in the stablecoin Terra, later renamed Terra USD Classic (USTC). Hodlnaut subsequently suffered another blow with the collapse of FTX.
In an attempt to avoid compulsory liquidation, Hodlnaut applied to the court for interim judicial administrators. This action granted the company creditor protection, but it came at a cost. Hodlnaut cut his staff by a staggering 80 percent and faced a police investigation for delaying reporting of his USTC assets.
The company’s bid for a financial recovery hit further hurdles when creditors rejected a proposed restructuring plan in January. Subsequently, in April, a majority of creditors voted for liquidation.
A potential lifeline emerged in August 2023, when OPNX offered former 3AC founders Su Zhou and Kyle Davis $30 million of their FLEX token for a 75% stake in Hodlnaut. However, the proposal was rejected by the interim judicial administrators the following month after FLEX’s value fell by 90%.
With the curtains down on the harrowing saga of Hodlnaut, the cryptocurrency community has to. Reflect on the challenges and uncertainties that continue to plague the industry, even as it tries to recover from the crypto winter.
