Cryptocurrency lending firm Hodlnaut has cut most of its workforce and has applied to be placed under receivership due to bleak financial circumstances.
Hodlnaut, which offers interest-bearing cryptocurrency investment options in accredited institutions, confirmed on Friday the serious situation. The poor financial situation of the company is attributed to the losses suffered by its Hong Kong subsidiary during the infamous TerraUSD (UST) crash, to the high volumes of withdrawals and the general decline in the cryptocurrency markets.
The company has chosen to seek judicial management, which will see the Singapore Court appoint a manager to review its accounts and activities as a last resort to prevent the liquidation of Hodlnaut’s Bitcoin (BTC) and Ether (ETH) holdings. .
The judicial management will also allow the company to put in place a recovery plan and potentially rehabilitate the company. The firm’s statement noted that it plans to reset its asset-to-debt ratio to 1:1 to allow users the ability to withdraw their initial cryptocurrency deposits.
Hodlnaut also noted that it was exploring the option of allowing users to withdraw initial deposits with accrued interest in full before closing their accounts with Hodlnaut. This is now subject to the approval of the soon to be appointed judicial manager.
The company will take measures to stabilize its liquidity by reducing interest rates on deposits, for which all interest rates on open terms will be 0% APR from August 22. The company has also confirmed that it has laid off 40 employees, representing 80% of its team, to further cut costs.
The request for judicial management will take place on August 22, just a couple of weeks after Hodlnaut suspended withdrawals and deposits on its platform. The firm has maintained that it had no investment exposure to now-broken lending firm Three Arrows Capital, but on-chain analytics suggest that Hodlnaut had exposure to Terra’s failed UST algorithmic stablecoin.
Hodlnaut also confirmed that there were ongoing proceedings with the Singapore Attorney General and the Singapore Police Force.
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