Hodlnaut heading for liquidation after failure of restructuring, sale efforts

Recovery from the crypto winter is proceeding, but Hodlnaut won’t survive it. A sealed court order in Singapore appears to spell its doom.

Crypto lender Hodlnaut’s days appear to be numbered after the High Court of Singapore ended judicial management and ordered its liquidation. Users’ funds have been frozen since August 2022. 

Former Hodlnaut interim judicial manager (IJM) Aaron Loh Cheng Lee announced in a letter dated Nov. 10 and posted on the website of EY that he and fellow IJM Ee Meng Yen Angela have been discharged from that position and appointed liquidators.

The liquidation decision was made by the Singapore court in a Winding-up Order in response to their application. According to an attachment to Lee’s letter, that decision is sealed at the moment.

Singapore-based Hodlnaut suspended deposits and withdrawals and simultaneously withdrew its licensing application before the Monetary Authority of Singapore on August 8, 2022. The company attributed its decision to “recent market conditions.” According to Lee’s letter, Hodlnaut’s creditors include 17,000 users. Major creditors included Samtrade Custodian, S.A.M. Fintech and the Algorand Foundation.

Related: Algorand Foundation outlines $35M exposure to crypto lender Hodlnaut

Hodlnaut was apparently a victim of the systemic turmoil that struck the industry with the collapse of the Terra ecosystem and Three Arrows Capital (3AC). It did not have exposure to 3AC, but reportedly held around $150 million in Terra stablecoin, since renamed TerraUSD Classic (USTC), at some time. It later took another financial hit with the collapse of FTX.

The value of FLEX token — the proposed settlement digital currency for Hodlnaut’s $30 million buyout — has plummeted 90% since the offer was made in early August. https://t.co/PDgFgiKp4P

— Cointelegraph (@Cointelegraph) September 19, 2023

Hodlnaut avoided forced liquidation by applying for and receiving court-appointed IJMs. It subsequentlyreceived creditor protection and cut its staff by 80%. It also reportedly faced a police investigation of a delay in its reporting of its USTC holdings.

Creditors rejected a restructuring plan in January and voted overwhelmingly for liquidation in April. OPNX, founded by former 3AC founders Su Zhu and Kyle Davies, among others, offered $30 million worth of its FLEX token for a 75% share in Hodlnaut in August 2023, but that offer was rejected by the IJMs the following month after the value of FLEX plummeted by 90%.

A U.S. court approved the bankruptcy plan of crypto lender Celsius on Nov. 9.

Magazine: 3AC fugitives in disarray as OPNX faces new peril: Asia Express