hodlnaut crypto savings platform 2

The Singaporean crypto savings platform Holdnaut has announced that it has paused all withdrawals, swaps, and transfers from customers within its platforms due to “recent market conditions”.

In a press release published yesterday, the Asian brokerage firm stated that this decision was made to preserve the platform’s assets and “protect users’ long-term interests”.

As a result of this incident, the broker is deciding to withdraw its application to obtain a license to operate as a regulated digital payment token (DPT) in Singapore and will no longer provide these services to users within the country.

Hodlnaut stated that they have appointed Damodara Ong LLC as consultants to help the firm in drafting a recovery plan. However, the platform did not disclose the specific reason that led them to make this difficult decision.

In regards to when withdrawals may be resumed, the broker abstained to provide a specific date and acknowledge that “it will not be a short process”.

“Halting withdrawals and token swaps was a necessary step for us to stabilise our liquidity, and give us the time to work closely with our legal advisors to come up with the best possible restructuring and recovery plan for our users”, the press release stated.

Users will still be able to access their accounts and check their balances and the platform will also continue to accrue interest on their deposits. According to the leadership team, the next update on the situation will be published on 19 August on the broker’s website and social media accounts.

Hodlnaut’s Exposure to the Terra Ecosystem Could Be the Root of its Problems

According to tweets from an anonymous crypto researcher named FatMan, it was the platform’s exposure to failed UST trades what put the firm in trouble. In April, the platform started to offer 14% APYs on UST – the now-demised stablecoin of the Terra ecosystem.

It appears that Hodlnaut used Terra’s crypto-savings protocol Anchor to generate yields that allowed them to pay customers the interest they promised on the different assets supported by the platform and kept the difference.

If this is the case, the implosion of the Terra ecosystem may have resulted in several million in losses to the firm and, since the broker used customers’ assets in these operations, the balance sheet hole may be quite large considering that both LUNA and UST have lost 99.9% of their value since May.

The Wayback Machine Confirms Hodlanut Did Support LUNA and UST Deposits

According to the Internet Archive’s Wayback Machine, on 4 December 2021 the platform offered APYs of 7.5% on deposits of up to 2 BTC, 12.7% on USDC and USDT deposits, and as much as 8.3% on DAI deposits.

Later in April, the firm listed UST and LUNA within its platform and offered yields of 14% and 6.7% respectively for users who deposited these tokens.

Even though the developing team has not acknowledged that they were exposed in any way to the tokens of the original Terra network, there is evidence that the tokens were once listed on the platform.

Singapore is Gaining a Bad Reputation Due to Scammy Crypto Firms

Singapore has progressively become the Asian hub for crypto firms but is reputation its being hurt by incidents such as this one as regulatory oversight of these companies appears to be weak.

The most prominent incident thus far has been the collapse of the crypto hedge fund Three Arrows Capital (3AC), which was officially domiciled in the country and even registered with the Monetary Authority of Singapore (MAS) as an investment fund.

The fund is now bankrupt and it is now evident that authorities failed to timely identify how threatening the fund was to the stability of the crypto market – a segment of the financial system that is worth almost a trillion and that is increasingly gaining importance as digital assets keep being embraced by investors.

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