According to reports, Hodlnaut, a Singaporean cryptocurrency lending platform, lost almost $190 million as a result of its exposure to Terra’s algorithmic stablecoin UST.
One of the most well-known crypto incidents so far this year was the latter’s collapse in May. According to numerous accounts, the crash of the native token LUNA and the stablecoin UST resulted in significant losses and even resulted in some investor suicides.
According to a recent Bloomberg report, Hodlnaut changed part of its holdings in digital assets to UST early this year. The company suffered a loss of around $190 million as a result of the stablecoin’s decline to almost zero.
“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 report reads.
The Singaporean company appears to have been concealing the information for some time. According to Bloomberg’s research, Hodlnaut destroyed more than 1,000 “essential” papers that might have revealed the aforementioned risk. As a result, the problems between Hodlnaut Pte in Singapore and the company’s Hong Kong subsidiary were unable to be resolved by the judicial managers. It is alleged that the former owes $58.3 million.
In August, Hodlnaut put a stop to deposits, withdrawals, and token exchanges, citing “challenging market conditions.” Some of its workers may have been aware of the problems if they removed assets totaling more than $500,000 a month earlier.
In an effort to “rehabilitate” its company and avoid having to liquidate its assets, Hodlnaut filed an application with the Singapore High Court to be put under judicial management:
“The judicial management application provides a moratorium (or temporary pause) against legal claims and proceedings against Hodlnaut. This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company.”
Nearly a week after stopping services, the company let go about 80% of its workers and dramatically lowered its interest rates.
At the end of August, the Singapore High Court granted the firm’s request to be placed under judicial management, and Rajagopalan Seshadri, Paresh Jotangia, and Ho May Kee were chosen as its temporary judicial managers.
According to some estimates, Hodlnaut has $88 million in assets and $281 million in unpaid debt, for an asset-to-debt ratio of 0.31.
