By George Ward
Hodlnaut, the Singapore-based crypto lending platform, is considering a possible liquidation. According to reports, the company’s creditors want the company’s assets to be liquidated and have no desire for a restructuring plan.
Hodlnaut To Liquidate Assets?
Last year, the executives overseeing the management of Hodlnaut’s operations presented a restructuring plan to the creditors. The restructuring plan aimed to help the lender resume operations.
However, on January 12th, Bloomberg reported that the creditors rejected a plan to remove the acting directors. In addition, the creditors do not believe in the idea of a restructuring plan, arguing that it would not benefit them.
Instead, they have called for a complete liquidation of the company’s assets and the creditors’ settlement. Algorand Foundation, a creditor, asked for a quick liquidation and sharing of Hodlnaut’s holdings so that such assets would still be valuable to them.
Meanwhile, Hodlnaut’s crisis came to light on August 8th when it paused withdrawals. At the time, the company stated that it had liquidity issues due to the bearish crypto market.
However, reports later revealed the company concealed its exposure to the Terra ecosystem for three months.
Meanwhile, on-chain data proved that the lender lied and held over $150 million in Terra’s algorithmic stablecoin. A judicial ruling in October also confirmed the on-chain report.
Hodlnaut Lost Over $190 Million
Further investigation revealed the company lost over $190 million to the May Terra crash. Meanwhile, the firm’s executives deleted several documents showing the firm’s investment to cover the case.
As the situation worsened, the crypto lender applied for judicial management under Singaporean law. The aim was to prevent a forced liquidation of its assets.
In August, the court placed the crypto firm in a creditor protection initiative. The company hoped to use the period to improve its asset-to-debt ratio and restore it to 1:1, allowing its customers to withdraw their funds.
Unfortunately, the judicial management initiative did not yield the desired result. In November 2022, the founders of the crypto lending platform, Simon Lee and Juntao Zhu (the acting CEO), faced trials for downplaying the company’s exposure to certain digital assets.
Law enforcement agencies also probed them for allegedly providing misleading information as facts. Furthermore, several investors complained against the company for fraud and cheating between August and November.
These complaints forced the Singapore Police to commence an investigation in November. The police encouraged all affected to submit claims with verifiable proof online and offline.