Troubled cryptocurrency lending platform Hodlnaut stated it is cutting down its staff size by a whooping 80% owing to poor financial condition.
The catastrophic situation was revealed on August 19 by Hodlnaut, which provides interest-bearing bitcoin investment alternatives in verified institutions.
High withdrawal volumes, the general decline in cryptocurrency markets, and losses incurred by the company’s Hong Kong affiliate after the historic TerraUSD crash have all been blamed for the company’s precarious financial situation.
To avoid liquidating Hodlnaut’s Bitcoin (BTC) and Ethereum assets, the business elected to apply for judicial management, which will see the Singaporean Court appoint a manager to oversee its accounts and operations (ETH).
Judicial management will also enable the business to implement a recovery plan and perhaps even undergo rehabilitation. According to the company’s announcement, it intends to return its asset-to-debt ratio to 1:1 so that users can withdraw their initial cryptocurrency deposits.
Hodlnaut also stated that it was considering giving users the option to close their Hodlnaut accounts before withdrawing their initial investment and all accumulated interest. This is now up for the soon-to-be-appointed judicial manager’s approval.
By lowering burn rates, the company will take steps to stabilize its liquidity. As a result, all open-term lending rates will be reduced to 0% APR as of August 22. The business also acknowledged that it had laid off 40 workers, or 80% of its staff, in an effort to further cut costs.
Just a few weeks after Hodlnaut stopped allowing withdrawals and deposits on its platform, the application for Judicial Management will be submitted on August 22.
Hodlnaut may have had exposure to Terra’s failing algorithmic stablecoin UST, according to on-chain analytics, despite the company’s insistence that it had no investment exposure to the now-bankrupt loan company 3 Arrows Capital.
Hodlnaut added that the Singapore Police Force and the Attorney-General of Singapore were also parties to ongoing legal actions.
