The Singapore Supreme Court has ordered the wind-up of Hodlnaut, marking the end of its judicial management phase. The company, once a major player in the cryptocurrency lending market, faced significant challenges following the collapse of the Terra ecosystem and the subsequent turmoil in the cryptocurrency market. Hodlnaut’s investment in TerraUSD Classic (USTC), amounting to approximately $150 million, contributed to its financial distress.
The court’s decision to wind up Hodlnaut, in response to an application by the company’s interim judicial managers, signifies a significant turn in the company’s ongoing financial struggles. This ruling concludes the judicial management phase and heralds a new chapter addressing the company’s financial issues.
Despite not being directly owned by Three Arrows Capital (3AC), reports indicate that Hodlnaut held substantial investments in the stablecoin TerraUSD Classic (USTC), valued at around $150 million. The company’s financial situation further deteriorated with the collapse of FTX, another key entity in the cryptocurrency industry.
Hodlnaut’s journey as a cryptocurrency lender through these challenges was tumultuous. On August 8, 2022, Hodlnaut suspended deposit and withdrawal operations, a move attributed to prevailing market conditions. This decision coincided with the withdrawal of its license application from the Monetary Authority of Singapore. Consequently, user funds were frozen since August 2022, impacting nearly 17,000 creditors, including prominent creditors such as Samtrade Custodian, SAM Fintech, and Algorand Foundation.
To overcome financial difficulties, Hodlnaut sought the appointment of specific international judges by the court and received them. This step provided the company with significant manpower reduction of up to 80% and protected the creditors. Additionally, the company faced a police investigation regarding delayed reporting of its holdings in USTC.
However, despite these efforts, Hodlnaut’s creditors voted overwhelmingly in favor of liquidation in April, rejecting the proposed restructuring plan in January. Furthermore, an offer in August 2023 from OPNX, founded by former 3AC founders Su Zhu and Kyle Davies, was rejected by IJMs following a significant decline in the value of the FLEX token associated with OPNX.
The wind-up order issued by the Singaporean court follows a similar path taken by other cryptocurrency lenders, such as Celsius, whose liquidation plan was approved by a U.S. court just one day before Hodlnaut’s liquidation announcement. The sealed Supreme Court decision puts an end to Hodlnaut’s efforts to salvage its operations through judicial management. Aaron Low Cheng Lee and Ee Ming Yen Angela, former IJMs, have been appointed as the liquidators to oversee this new phase.
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