On August 8, Hodlnaut halted all services on its platform claiming a liquidity problem and tumultuous market circumstances.
The Singapore court on August 29 ordered the Singapore-based cryptocurrency lending company Hodlnaut to be under interim judicial management, a type of creditor protection scheme.
Three weeks after Hodlnaut stopped all trading and withdrawals on its platform due to a liquidity crisis, court orders were issued. The cryptocurrency lending platform informed its users on August 30 via an official blog post that Ee Meng Yen Angela and Aaron Loh Cheng Lee had been recruited as temporary judicial managers under the direction of EY Corporate Advisors. The blog entry stated:
“The Court has delivered judgment on 29 August 2022, and has been confirmed that Hodlnaut will be placed under Interim Judicial Management.”
In order to prevent forced liquidations during the down market, the crypto lender requested judicial management. According to Singaporean legislation, the aforementioned creditor protection mechanism enables financially challenged businesses to rehabilitate themselves. According to this statute, the director of the company temporarily relinquishes control to a person designated by the court as the judicial manager.
Hodlnaut reduced its personnel by 80% earlier this month before requesting judicial management. To enable users to withdraw their initial cryptocurrency investments, the company aims to use the judicial management period to return its asset-to-debt ratio to 1:1.
The cryptocurrency lender previously disclosed that they were looking into the possibility of letting consumers withdraw their initial deposits with all earned interest before canceling their accounts. This decision is currently pending approval by recently appointed judicial managers.
The collapse of the now-defunct TerraUSD (UST) algorithmic stablecoin was one of many crypto lending companies that Hodlnaut became a victim of. A $40 billion Terra economy was destroyed by the collapse of UST, and numerous crypto lending companies with exposure to UST finally failed.
