hodlnaut crypto savings platform

Authorities appear to be exerting pressure on the beleaguered Singaporean crypto savings platform Hodlnaut as indicated by a recent update from the developing team in which they acknowledged that the country’s police force has opened a proceeding against the company.

On 8 August, Hodlnaut decided to pause all withdrawals to “protect users’ long term interests”. Troubles appear to have begun back when the Terra ecosystem collapsed as Hodlnaut reportedly used the Anchor Protocol to earn money for its customers’ deposits to pay the elevated interest rates it once offered.

Roughly a week after the developing team announced that they had applied with the Singapore High Court to be placed under judicial management as a way to avoid a forced liquidation of its assets.

This is also known as a moratorium, which is a period during which creditors cannot enforce their claims on the company’s assets. If the court approves this application, Hodlnaut will have more time to draft a restructuring proposal. During this period, a Judicial Manager will be appointed to oversee the company’s operations and finances.

Hodlnaut is Another Victim of the Collapse of the Terra Ecosystem

Meanwhile, the developing team just published an update for its customers and other stakeholders this morning in which it revealed further details about the events that led to the current situation.

“Hodlnaut’s present financial circumstances are a result of losses suffered by Hodlnaut’s Hong Kong subsidiary during the TerraUSD crash, unusually high volumes of withdrawals, the overall decline in cryptocurrency prices from their 2021 highs and issues relating to certain user(s) who have deposited substantial amounts of cryptocurrency with Hodlnaut”, the press release stated.

The developing team stated that their recovery plan aims to restore the company’s asset-to-debt ratio to “at least 1” – a situation that should supposedly enable Hodlnaut to allow customers to withdraw all the assets they currently hold within the platform.

As part of the measures the company will be undertaking, 80% of Hodlnaut’s employees (around 40 people) will be laid off to reduce the firm’s operating expenditures. In addition, the company will reduce the interest rate paid on all its assets to 0% effective on 22 August.

The Singapore High Court has scheduled a hearing for the firm’s moratorium application for 22 August and users will be updated a day after about the court’s decision and any other relevant information.

Hodlnaut’s Team Confirms Active Police Proceedings

The developing team opted to answer some interesting questions about the platform’s situation. For example, they stated that the founders of the business are still in Singapore and actively working on its recovery plan.

In addition, they informed the public that the platform had no deposits with the Celsius Network and that both the Singapore Police Force and the country’s Attorney General’s office have “pending proceedings” against the company.

The management will be proposing that users are allowed to withdraw the entire balance of their account if they opt to do so. However, they will be giving up any further claim on the company’s assets if they choose to do that and their accounts will be closed immediately after the withdrawal is made.

The crypto platform is the latest in a growing list of companies located in Singapore to apply for a moratorium after the crypto winter started. Only a few days ago, the crypto exchange Zipmex secured 3 months of creditors’ protection from the Singapore High Court after succumbing to bad loans made to Babel Finance.

This list of collapsed crypto firms within the country includes Three Arrows Capital,  a once high-flying hedge fund whose leveraged bets have been considered one of the causes of the instability in the crypto market, and Vauld, a bankrupted crypto exchange that could soon be acquired by its rival Nexo.

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