Singapore Court Orders Liquidation of Crypto Lender Hodlnaut Amid Industry Turmoil
Summary:
The High Court of Singapore has ordered the liquidation of cryptocurrency lender Hodlnaut, leading to frozen user funds since August 2022. The order follows the company's suspension of deposits and withdrawal activities due to recent market conditions. Hodlnaut's financial struggles were primarily due to industry-wide disruptions including the collapse of Terra ecosystem and Three Arrows Capital. Major creditors, such as Samtrade Custodian, S.A.M. Fintech, and the Algorand Foundation, are awaiting payment. An unsuccessful offering by OPNX sought to buy a significant stake using their FLEX token, whose value plummeted soon after the proposal.
Singapore's High Court has sealed the fate of cryptocurrency lending platform Hodlnaut by terminating its judicial management and endorsing its dissolution. Client assets have been locked since August 2022. Former judicial caretakers, Aaron Loh Cheng Lee and Ee Meng Yen Angela, announced their appointment as liquidators following their dismissal from their previous roles in a communique dated November 10, shared via EY's platform. Singapore's judiciary approved the liquidation via a Winding-up Order following a request by Aaron Lee, though the details of this decision remain confidential for now. Hodlnaut, a Singaporean firm, ceased all deposits and withdrawals and withdrew its licensing application from the Monetary Authority of Singapore on August 8, 2022, due to what it referred to as "recent market conditions". As revealed in Lee's letter, Hodlnaut owes money to around 17,000 customers, with primary creditors being Samtrade Custodian, S.A.M. Fintech, and the Algorand Foundation. The downfall of Hodlnaut was seemingly triggered by the industry-wide chaos caused by the Terra ecosystem and Three Arrows Capital's (3AC) collapse. Although Hodlnaut wasn't directly exposed to 3AC, it allegedly possessed roughly $150 million of the now renamed Terra stablecoin, TerraUSD Classic (USTC). Its finances further suffered due to FTX's downfall. The proposed resolution currency for Hodlnaut's $30 million buyout, the FLEX token, has since seen a drop in value by 90%. Hodlnaut managed to stave off obligatory dissolution thanks to the appointed judicial caretakers and subsequent creditor protection, and it also reduced its personnel size by 80%. It is also under investigation by the police in relation to delayed disclosure of its USTC portfolio. A restructuring plan put forward in January was turned down by the creditors, and in April, the majority vote opted for liquidation. OPNX, established by previous founders of 3AC including Su Zhu and Kyle Davies, proposed a $30 million purchase with their FLEX token for a 75% stake in Hodlnaut in August 2023. However, this proposal was declined by the judicial caretakers the following month when FLEX's value fell 90%. Finally, approval was given by a U.S. court for the bankruptcy plan of another crypto lender, Celsius, on November 9.
Published At
11/10/2023 5:49:48 PM
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