The crypto lending platform Singapore-based Hodlnaut is seeking a court order to manage its current liquidity crisis and avoid forced asset liquidation in the current bear market.
The cryptocurrency lender informed its users in an announcement on Tuesday that they have applied to the Singapore High Court to be placed under judicial management.. The firm said:
“We are looking to avoid a forced liquidation of our assets as it is a sub-optimal solution that will force us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices. Instead, we believe that going to court would provide the best chance of recovery.”
Receivership is a Singapore law that allows financially troubled companies to rehabilitate themselves. Under this law, the court appoints an officer called a judicial manager for the troubled company, who takes over as the director of the company for the time being. The appointment of a judicial manager can take a few months. Until confirmed by the court, the company may request the appointment of an interim judicial manager to act temporarily in the same function.
Hodlnaut has recommended Tam Chee Chong, director of the financial consulting firm Kairos Corporate Advisory, as interim and later judicial manager. The crypto lender said that Chong has nearly four decades of experience advising corporate finance and has taken on the role of receiver at several companies that underwent restructuring. The ad said:
“With his experience and track record, we believe he will be able to execute our turnaround plan and effectively restructure the business.”
The request must still be seen by the court and the company has given August 19 as the next date for further updates on its request for judicial management..
If approved, The law would also protect Hodlnaut from claims and legal proceedings temporarily, which the company said would provide “breath to focus our efforts on the recovery plan to rehabilitate the company.”.
Hodlnaut became one of many crypto lenders to fall prey to crypto contagion sparked by the collapse of TerraUSD Classic (USTC) and fueled by the insolvency of billionaire crypto hedge fund Three Arrows Capital., which had taken several million dollars in loans from these cryptocurrency lenders. The cryptocurrency lender halted all trading activity along with deposits and withdrawals on August 8, due to market conditions and its liquidity crisis.
Although Hodlnaut avoided any exposure to 3AC, multiple reports and on-chain data suggest the firm held around $150 million in USTC at some point.. Hodlnaut did not respond to requests for comment from Cointelegraph at press time.
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