Hodlnaut Faces Liquidation in Singapore Following Financial Woes

According to a recent report, Singapore’s crypto lending firm, Hodlnaut, is facing liquidation. This decision comes in the wake of the company’s unsuccessful efforts to restructure, following significant financial losses tied to the Terra/Luna crash and the collapse of FTX last year.

Hodlnaut’s Failed Rescue Mission

Hodlnaut’s journey to liquidation began with a loss of $189.7 million in the Anchor Protocol, a now-defunct DeFi platform for the Terra stablecoin UST. Adding to their woes, over $13 million of their assets were entangled in the bankruptcy of the FTX exchange. Consequently, the company attempted to shield itself from immediate liquidation by seeking judicial management to protect its remaining crypto assets from a forced sell-off.

However, this salvage attempt was met with resistance. In August, Hodlnaut informed its 17,000 users about halting withdrawals and withdrew its license application from the Monetary Authority of Singapore. Aaron Lee and Angela Ee stepped in as judicial managers, but their efforts could not steer the firm away from its impending fate. Moreover, the company had to lay off 80% of its workforce, a telling sign of the deepening crisis.

Creditors Choose Liquidation Over Restructuring

Creditors, including the Algorand Foundation, ultimately dismissed the restructuring plan. They argued that liquidation would better preserve the company’s remaining assets. This decision, reached in January, sealed Hodlnaut’s fate. The liquidation, managed by the auditing firm EY, marks the end of a challenging chapter for Hodlnaut and its users. 

In addition, the Singapore police investigation into Hodlnaut’s alleged “false representations relating to the company’s exposure to a certain digital token” further complicated matters. This investigation, launched in November, added a layer of legal scrutiny to the firm’s already precarious situation.