- Crypto lending platform Hodlnaut announced that it has immediately suspended withdrawals, token swaps, and deposits within the platform.
- The decision was made with the aim of “focusing on stabilizing our liquidity and preserving assets”.
- The next update on the status of the platform is expected to be on August 19.
With this, it becomes the latest crypto firm to enter the long list of platforms experiencing liquidity problems.
According to the ad, the decision was made with the objective of “focusing on stabilizing our liquidity and preserving assets”, but additionally, Hodlnaut is already consulting with the law firm Damodara Ong LLC on the “feasibility and timing” of its restructuring and recovery plan.
Although the condition of the crypto market has not worsened, it has not improved either and given the current context, crypto companies find themselves participating in a resistance race where only a few will be able to withstand the current pressures.
Tension in the crypto market continues to rise
It is relevant to remember that the collapse of many crypto firms began with the collapse of the TerraLabs ecosystem made up of the stablecoin TerraUSD (UST) and the cryptocurrency Terra (LUNA) made up of the tokens that was followed by the bankruptcy of the main cryptocurrency hedge fund called Three Arrow Capital (3AC).
Since then, a domino effect has spread among cryptocurrency lenders that precisely had exposure to 3AC and/or the Terra ecosystem.
Hodlnaut was launched in 2019 and has allowed investors to earn interest on their cryptocurrencies, but why is it now cash-strapped? Did you have exposure to 3AC and/or the Terra ecosystem? It is not yet clear how the Hodlnaut exhibition went.
Regardless of the reasons why they have made the decision, the reality is that now platform users are in limbo since, according to the statement, the next update is expected to be on August 19. Yes, approximately 10 days of uncertainty.
“We cannot provide a definitive date as the details have yet to be finalized amongst all our stakeholders, but it will not be a short process.”, This explains the statement regarding when users will be able to withdraw their funds.
Hodlnaut withdraws its license with the Monetary Authority of Singapore
Hodlnaut also reported that it would be withdrawing its license application from the Monetary Authority of Singapore (MAS). The license you received in March of this year allowed Hodlnaut to provide payment services in digital tokens.
“Hodlnaut no longer provides regulated Digital Payment Token (DPT) services, i.e. our token swap feature. For the avoidance of doubt, Hodlnaut will also suspend all lending services.” explains the statement.
In accordance with Reutersa MAS spokesperson explained that The license that Hodlnaut would have received only regulated the crypto firm for the risks of money laundering and financing of terrorism. In this sense, the license did not require capital or liquidity requirements based on risk, “nor are they obliged to safeguard customer money or digital tokens from the risk of insolvency.”
It is precisely for this reason that the spokesman assures that the MAS repeatedly warns about the risks of operating with cryptocurrencies.
Without a doubt the risks of participating in the crypto market are increasing, especially as tensions rise and more crypto firms go down. Therefore, users must remember the importance of learning to manage the risk of their portfolio and always diversify.
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