Blaming market conditions and a lack of liquidity, Singapore-based crypto lending platform Hodlnaut has become the latest company to suspend withdrawals and deposits.
The crypto lending firm made an official announcement on Monday, stating that market conditions have forced it to suspend its services and that it is actively working on recovery plans.
Dear users, we regret to inform you that we will be halting withdrawals, token swaps and deposits immediately due to recent market conditions. We have also withdrawn our MAS license application. Here is our full statement https://t.co/5KfHUBzWsn Our next update will be on 19 Aug.
— Hodlnaut (@hodlnautdotcom) August 8, 2022
Dear users, we are sorry to inform you that we will be suspending withdrawals, token swaps and deposits immediately due to recent market conditions. We have also withdrawn our MAS license application. Here is our full statement https://t.co/5KfHUBzWsn Our next update will be August 19.
Hodlnaut also stated that it withdrew its application for a regulatory license in Singapore and as a result, it would no longer be able to offer any token swap functionality. The official announcement said:
“We are actively working on the recovery plan which we hope to provide updates and details as soon as possible. We are consulting with Damodara Ong LLC on the feasibility and timing of our intended execution plan and are strategizing our recovery plan taking taking into account the best interests of our users”.
The cryptocurrency lending platform said it would suspend all of its social media accounts except the official Twitter and Telegram ones. Aside from social media suspensions, founder Juntao Zhu has gone private on Twitter.
The crypto lending crisis began with the collapse of the Terra (LUNA) ecosystem, now renamed Terra Classic (LUNC), followed by the bankruptcy of major cryptocurrency hedge fund Three Arrow Capital (3AC). The consecutive market turmoil created a ripple effect for crypto lenders with exposure to the hedge fund as well as the Terra ecosystem. Voyager Digital, Celsius, and Blockchain.com were some of the major cryptocurrency lenders to suspend their services.
Hodlnaut managed to avoid any exposure to 3AC, but some reports have alleged that the firm was not transparent about its investments in the now-defunct Terra algorithmic stablecoin.. A report published by Twitter user Fatman in June pointed to Hodlnaut’s high exposure during the stablecoin depeal and how they misrepresented his position:
They sold some UST as low as $0.40, degen shorted through bETH cross-margining, had huge, risky shorts on exchanges in the best case scenario, and in a hilarious move of brave defiance, they even re-entered Anchor after the collapse (small size). https://t.co/yfbTET4U4n (15/25)
— FatMan (@FatManTerra) June 26, 2022
They sold some UST as low as $0.40, went short via bETH cross-margining, had huge risky exchange shorts at best, and in a hilarious move of brave defiance, even re-entered in Anchor after collapse (small size)
Zhu has claimed that the company did not purchase any UST or incur any losses on its UST performance services, but did not offer any documentation as evidence.
The apparent downfall of yet another crypto lending platform sparked furious reactions from the crypto community, with many advocating that investors store their crypto outside of the exchange. Others pointed to the ripple effect that the UST collapse created in May with effects being seen even now.
Another one bites the dust. Now that many of the largest players have gone under, which ones are next? If you still have assets with third parties, you should withdraw them to your own wallet ASAP. Not your keys, not your crypto. https://t.co/mY85yBhNbg
— Soldman Gachs ⌐◨-◨ (@DrSoldmanGachs) August 8, 2022
Another one bites the dust. Now that many of the biggest players have gone under, what’s next? If you still have assets with third parties, you should withdraw them to your own wallet as soon as possible. If they are not your keys, they are not your cryptocurrencies.
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