Singapore-based crypto lending platform Hodlnaut is the latest firm to have entered crisis mode, freezing withdrawals for users. The lender is said to be working on a recovery plan, but has not disclosed any additional information regarding the current status of users’ funds.

In brief

  • Crypto lender Hodlnaut halted withdrawals and operations, citing “market conditions.”
  • The firm has withdrawn its application for a digital payment token license before the Monetary Authority of Singapore, indicating operations may cease entirely.
  • Hodlnaut held around $500 million in assets under management prior to halting withdrawals.

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Hodlnaut suspends its services

Per an announcement on Monday, the lender suspended withdrawals, token swaps, deposits and all services amidst reported liquidity problems.

We would like to reassure you that this difficult decision was taken for us to focus on stabilizing our liquidity and preserving assets,” the firm said, reassuring users that it is working towards a long-term solution. “We have reached this difficult decision due to recent market conditions,” the firm continued, without providing more details on the state of its balance sheet.

The lender also revealed that it withdrew its application for a digital payment token (DPT) license with the Monetary Authority of Singapore, indicating that these plans are may be scrapped as probable bankruptcy proceedings ensue. Hodlnaut limited its social media portals to email, Twitter and Telegram in order to “consolidate [its] efforts and give accurate information promptly.

Notably, the lender has taken down its team page, and the Hodlnaut founder, Juntao Zhu set his Twitter profile to private. 

Insolvency Crises

The firm is the latest casualty in a series of centralised crypto platforms that declared bankruptcy or limited operations following Terra’s cataclysmic collapse in May. The industry-wide collapse saw Terra’s native LUNA token plummet to zero in a matter of days, leading to a ripple effect that caught several crypto funds off-guard. Among the casualties was Three Arrows Capital, whose failure to repay loans led crypto lenders such as Celsius, Voyager Digital, Vauld, and Babel Finance, into insolvency crises.

The contagion effect rippled across the industry such that Bitcoin Miners were forced to empty their entire inventory in May. But according to an intelligence report from mining firm Blockware on July 29, the mining ecosystem is expected to shift from distribution to accumulation by September.

Per Hodlnaut’s recently edited LinkedIn profile, the lender used to hold around $500 million in assets under management. The firm’s terms of service resemble that of Celsius and Voyager, which means depositors could be categorised as unsecured creditors in the event of bankruptcy proceedings. In such cases, depositors might only recover a portion of assets.

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