Singapore-based crypto lending firm Hodlnaut was placed under interim injunction, a kind of creditor protection program, by a Singapore court on Monday.
The court orders came three weeks after Hodlnaut froze all trading and withdrawal activities on its platform, citing a liquidity crisis. In an official blog post on August 30, The crypto lending platform notified its users that Ee Meng Yen Angela and Aaron Loh Cheng Lee of EY Corporate Advisors had been appointed interim receivers. The blog entry said:
“The Court has issued a sentence on August 29, 2022, and it has been confirmed that Hodlnaut will remain under provisional judicial management.”
The crypto lender requested judicial management to avoid forced liquidations in the bear market. The aforementioned creditor protection program provided for in Singapore law allows companies in financial trouble to recover. Under this law, the court appoints an official called judicial manager who takes over as director of the company momentarily.
As Cointelegraph reported earlier this month, Hodlnaut cut 80% of its staff before requesting judicial management. The company hopes to use the judicial management period to restore its 1-to-1 asset-to-debt ratio to allow users the ability to withdraw their cryptocurrency deposits.
The cryptocurrency lender previously reported that they were exploring the option of allowing users to withdraw their initial deposits with accrued interest in full before closing their accounts, which is now subject to the approval of the newly appointed judicial managers
Hodlnaut is one of the many cryptocurrency lending firms that have been hit by the contagion caused by the crash of the now-defunct algorithmic stablecoin, TerraUSD Classic (USTC). The implosion of USTC caused the collapse of a $40 billion Terra ecosystem, and many crypto lending companies with exposure to USTC ended up disappearing.
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