This year has typically been characterized by crypto companies halting customer withdrawals. When the community was dealing with the downfall of crypto lenders like Three Arrows Capital and others, Hodlnaut—a Singapore based start-up—suspended withdrawals and deposits in August citing market conditions. After that, the company filed for creditor protection and a few days later, the Singapore High Court green-flagged the same.
Now, per the latest revelation, the crypto lender lost roughly $190 million in the Terra ecosystem collapse that unfurled earlier this year.
First report to court, Hodlnaut creditors submitted
The Interim Judicial Managers revealed in their first report to the court and the company’s creditors,
“It appears that the directors had downplayed the extent of the group’s exposure to Terra/Luna both during the period leading up to and following the Terra/Luna collapse in May 2022.“
The downfall of Terra’s tokens—the algorithmic stablecoin UST and sister token LUNA—in May triggered this year’s crypto meltdown. Directors of the lender’s Hong Kong arm said that the loss sustained by the company equated to $189.7 million.
In a letter dated July 21, Hodlnaut’s directors “made an about-turn” about the impact and informed a Singapore police department that digital assets had been converted to TerraUSD.
Much of the latter was, notably, staked on the now-defunct Anchor Protocol. Furthermore, a review of transaction data by the judicial managers revealed that the crypto lender’s employees withdrew a total of $550,000 between the beginning of July and the time the firm froze withdrawals for customers.
The IJMs further accused Hodlnaut founders Zhu Juntao, Simon Lee and some unnamed employees for not being cooperative. Reportedly, they have been hindering judicial managers from accessing and controlling several crucial documents and records. Since the IJMs were appointed, over 1,000 files have been deleted from the Google Workspace.