Crypto lending platform Hodlnaut is suspending transactions including withdrawals and deposits, citing market conditions and a lack of liquidity as a reason.
On Monday, the crypto lending business released a formal statement explaining why it had to cease its operations and stating that it was already working on a recovery strategy.
Additionally, Hodlnaut announced that it has withdrawn its application for a regulatory license in Singapore and would no longer be able to provide any token swap capabilities. The official statement stated:
“We are actively working on the recovery plan that we hope to provide updates and details on as soon as permissible. We are consulting with Damodara Ong LLC on the feasibility and timelines of our intended execution plan and are strategizing our recovery plan with our users’ best interests in mind.”
All of the cryptocurrency lending platform’s social media accounts—aside from the official Twitter and Telegram accounts—will be suspended, it announced. In addition to the prohibitions on social media, creator Juntao Zhu has made his Twitter account private.
The collapse of the Terra (LUNA) ecosystem—now known as Terra Classic (LUNC)—and the bankruptcy of prominent crypto hedge fund Three Arrow Capital marked the beginning of the crypto loan crisis (3AC).
The simultaneous market turbulence had a cascading effect on cryptocurrency lenders who had exposure to both the Terra ecosystem and the hedge fund. Major cryptocurrency lenders like Voyager Digital, Celsius, and Blockchain.com ceased their operations.
Despite the fact that Hodlnaut was able to avoid any 3AC liability, some sources suggest that the company was not upfront about its investments in Terra’s now-defunct algorithmic stablecoin.
In a post shared in June on Twitter by the user name Fatman, Hodlnaut was exposed widely during the stablecoin’s depeg and was found to have misrepresented their position:
Zhu asserted—without providing any supporting documentation—that the company did not purchase any UST and did not suffer any losses as a result of its UST yield services.
The apparent failure of another cryptocurrency loan business sparked outraged responses from the cryptocurrency community, with many urging investors to deposit their cryptocurrency somewhere other than exchanges. Others mentioned the cascading repercussions of the UST collapse in May, which are still being felt today.
