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Crypto Lender Hodlnaut Lost Close To $190M In TerraUSD Collapse

1 Nov, 20223 min readOther
Crypto Lender Hodlnaut Lost Close To $190M In TerraUSD Collapse

The Singapore-based crypto lender has lost close to $190 million, as per reports, due to its exposure to Terra’s algorithmic stablecoin UST.

The crypto lender platform had downplayed its exposure to Terra’s stablecoin UST despite the fact that it had suffered a huge loss from the recent wipe-out.

This report has been found by interim judicial managers, according to Bloomberg.

It is one of the first-ever reports since the Singapore court granted Hodlnaut protection from creditors in order to provide them time to chalk up a recovery plan.

The protection was granted in the month of August. Terra’s algorithmic stablecoin UST collapse has been one of the most major and talked about crypto mishaps this year.

There are many reports that have mentioned a lot of crucial losses and that some investors have even been driven to the point of committing suicide.

The reports have also stated that Hodlnaut converted some of its digital assets to UST sometime early this year.

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.

Crypto Lender Has Not Maintained Transparency For Sometime

According to reports, Hodlnaut has been misstating the facts. Data has revealed that the crypto lender had deleted more than 1000 key documents, which could have been revealed before the exposure.

The judicial managers were not able to resolve the issues between the company’s Hong Kong subsidiary and Hodlnaut Pte in Singapore. The Hong Kong subsidiary owes $58.3 million.

The lender suspended withdrawals, deposits, and token swaps in the month of August, stating the “difficult market conditions.”

Some of its employees have withdrawn more than $500,000 worth of assets before indicating that they knew the issues that were prevailing.

Hodlnaut’s directors sent a letter informing the Singapore police department of the digital assets that the digital assets have been converted to TerraUSD.

Much of the TerraUST was given to the Anchor Protocol, which is a decentralized finance (Defi) platform developed on the Terra blockchain.

Hidden Documents

The lender had applied to the Singapore High Court in order to be placed under judicial management as that would help the platform rehabilitate its business and prevent a forced liquidation of its assets

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.

The judicial managers have struggled with finding several “key documents” in relation to the lender’s Hong Kong division.

This division of Hodlnaut owes $82.43 million (Singapore dollars) to Hodlnaut Pte in Singapore. Most of the company’s investments in Defi were made through the Hong Kong division, according to the reports.

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