Is it all over for Hodlnaut? The crypto lender is apparently reaching the end of the road as the High Court of Singapore ended judicial management and ordered its liquidation.
Quick Take:
- Hodlnaut goes into liquidation as judicial managers file a winding-up order.
- Creditors disapproved of the platform’s restructuring plan, urging liquidation.
- Hodlnaut’s exposure to Terra and FTX caused financially unsustainable damages.
Hodlnaut has failed its restructuring plan as judiciary managers Aaron Loh Cheng Lee and Ee Meng Yen Angela look set to liquidate the platform. As per the document submitted by them, the judicial managers filed a winding-up order on November 10.
The crypto lender was unsuccessful in its restructuring plans, as its creditors resisted the proposal. Most of the creditors were of the view that the liquidation of the platform was better than its restructuring proposal.
Creditors also presented their views in front of the court, saying that liquidation would maximize the remaining assets of the company and make them available for distribution. However, Hodlnaut tried to get the two judiciary managers removed, but the court overruled the platform’s plea.
Hodlnaut Road to Liquidation – What Went Wrong?
Back in August last year, the crypto lender withdrew its licensing application in front of MAS after suspending deposits and withdrawals. The crypto winter was at its peak in those days, and the platform failed to keep up with the market conditions.
Moreover, the fall of Terra and FTX had a strong impact on the company’s final ride. Cheng Lee and Angela reported that the company lost over $190 million amid its exposure to Terra. To make it even worse, Hodlnaut downplayed its exposure to the platform in front of the court.
As per reports, Hodlnaut was holding around $150 million in TerraUSD. The company also lost $189.7 million under the Anchor Protocol. Plus, it had over $13 million in assets in FTX. The collapse of FTX and Three Arrows Capital (3AC) made it tough for the company to bounce back from its financial woes.
As a result, the company laid off 80% of its employee force. An investigation started against Hodlnaut in November last year, in which the police claimed that the platform made “false representations relating to the company’s exposure to a certain digital token.”
The restructuring plan of Hodlnaut saw resistance from its 17,000 creditors. Creditors, including the Algorand Foundation, dismissed the plan in January, urging the platform to preserve its remaining assets and funds. They voted in favor of the liquidation of the platform.
Unfortunately, Hodlnaut’s road toward bankruptcy was full of horrors. Its creditors are now hopeful of getting their funds back. But as far as the crypto lending platform is concerned, it is a wrap for them.
