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Hodlnaut Cuts Team to 10 as Singapore Police Gets Involved

Ruholamin Haqshanas

Published: August 19, 2022 7:57 pm

Singapore-based crypto lender Hodlnaut is the latest crypto platform to feel the cold of the ongoing “crypto winter.” The company has announced a judicial management filing, an 80% layoff, which brings down the count of its team members to 10 people, and legal proceedings with the Singapore police.

Hodlnaut Seeks Creditor Protection

Trouble crypto lender Hodlnaut has filed an application in Singapore to be placed under a form of creditor protection. In a blog post, the company said the move comes after its financial health was hit during the implosion of the Terra ecosystem and the overall crypto meltdown.

“Hodlnaut’s present financial circumstances are a result of losses suffered by Hodlnaut’s Hong Kong subsidiary during the TerraUSD crash, unusually high volumes of withdrawals, the overall decline in cryptocurrency prices from their 2021 highs, and issues relating to certain user(s) who have deposited substantial amounts of cryptocurrency with Hodlnaut.”

In a series of tweets, blockchain researcher FatManTerra claimed Hodlnaut lost $190 million during the Terra crash. The pseudonymous crypto researcher noted that the company “continued to tell customers they had zero Anchor exposure” up until recently.

Hodlnaut said the judicial management “would most benefit our users now and in the long run.” Hodlnaut claimed that the filing would avoid the liquidation of its crypto holdings at today’s “depressed” prices. Furthermore, it would provide the crypto lender “with the opportunity to execute its recovery plan and rehabilitate the company.”

Earlier this month, the crypto lender froze customer withdrawals. In the update, the company said it is exploring “the option of allowing users to withdraw their initial deposit, with interest accrued in full, at a discounted amount and close their account with Hodlnaut.” But since the company has already applied for judicial management, a court will need to review and approve this process.

More Trouble: Pending Police Proceedings and Lay Offs

In a bid to reduce the company’s expenditure, Hodlnaut has laid off 80% of its workforce, cutting down its number of team members to 10. The company will also change all open-term interest rates to 0% APR starting next week.

“Since we halted withdrawals, we have also laid off 80% of our employees (being approximately 40 employees), in order to reduce the company’s expenditure. The current team that we have retained are, in our assessment, necessary headcount in order for us to carry out key functions.”

Hodlnaut also confirmed that it has legal proceedings with the Singapore police, though it is “unable to disclose any information in this regard.” The company said its founders are in Singapore and “working hard on the recovery plan.”

Founded in 2019 by Juntao Zhu and Simon Lee, the crypto lender had more than $100 million in customer funds in February this year in customer funds across over 1,000 users. The figure was up from $1 million a year earlier.

This article originally appeared on The Tokenist