In a blog post published on Friday, Singaporean crypto lender Hodlnaut revealed significant layoffs and ongoing “police proceedings,” underscoring the precarious financial and legal predicament of the most recent company to suspend cryptocurrency withdrawals.
Hodlnaut said in the blog that in an effort to “stabilize our liquidity” and reduce costs, it let go 40 employees (or 80% of the workforce) and lowered interest rates to 0% APR. The company’s founders are still in Singapore and are “working hard on a recovery strategy.”
The cryptocurrency swap shop that pays interest claimed to be in “proceedings” with Singaporean authorities. Its blog kept quiet about the specifics but stated that the actions were taken to benefit users. Early in August, Hodlnaut froze the assets of those users; it is now looking for protection from its creditors.
Hodlnaut also withdrew its request for a licence from the Monetary Authority of Singapore, despite the fact that the central bank had given it in-principle approval in March.
The organization is the most recent in a long line of cryptocurrency lenders to falter this year due to market pressure, with Celsius Network and Voyager Digital both seeking bankruptcy protection. From more than $3 trillion in November, the total market valuation of cryptocurrencies has fallen to a little over $1 trillion today.
Along with Three Arrows Capital, Voyager Digital, and Celsius Network, Hodlnaut is one of the numerous cryptocurrency businesses that have failed due to depreciating market circumstances and collapsing businesses. Hodlnaut blamed “losses experienced” from the crash of TerraUSD in the blog post.
Hodlnaut seeks the appointment of a judicial manager
The Singapore High Court has received a request from the cryptocurrency lending platform to be placed under judicial management, which offers protection from creditors.
The application was submitted on August 13, 2022, five days after the corporation froze withdrawals, per a notice on Hodlnaut’s website. The application will provide the lender with a temporary barrier against any legal claims.
On August 22, 2022, the Singapore high court will hear the crypto lender’s request for legal protection. The company’s current directors may be replaced by an interim judicial manager who will be in charge of managing the company’s finances.