Hodlnaut Becomes Latest Crypto Lender to Freeze Withdrawals

Hodlnaut has said it is working on a recovery plan without disclosing any additional information concerning the current status of users’ funds.

Hodlnaut Suspends Services

Singapore-based crypto lending platform Hodlnaut has entered crisis mode. 

Dear users, we regret to inform you that we will be halting withdrawals, token swaps and deposits immediately due to recent market conditions. We have also withdrawn our MAS licence application. Here is our full statement https://t.co/5KfHUBzWsn Our next update will be on 19 Aug.

— Hodlnaut (@hodlnautdotcom) August 8, 2022

According to a Monday announcement, the lender has paused withdrawals, token swaps, and deposits amid liquidity issues. “We would like to reassure you that this difficult decision was taken for us to focus on stabilizing our liquidity and preserving assets,” the firm said reassuring users that it was working towards the best solution to protect their long-term interest. “We have reached this difficult decision due to recent market conditions,” the firm added without providing any further details concerning the state of its balance sheet.

Hodlnaut also revealed that it had withdrawn its application for a digital payment token (DPT) license with the Monetary Authority of Singapore, indicating it has no plans to continue operating and will likely file for bankruptcy. The firm also limited its social media presence to email, Twitter, and Telegram, saying it wanted to “consolidate [its] efforts and give accurate information promptly.” The lender has also taken down its team page, while Hodlnaut founder Juntao Zhu has set his Twitter profile to privatem. 

Hodlnaut is only the latest in a series of centralized crypto platforms to either go bankrupt or severely limit their operations in the aftermath of Terra’s collapse in May. The collapse—which saw the value of Terra’s native token LUNA plummet to zero in the space of a few days—led to a significant slump in the crypto market, catching several notable crypto funds and service providers off guard. Among the first biggest funds to blow up following Terra’s collapse was Three Arrows Capital, whose failure to honor loans plunged several crypto lenders, including Celsius, Voyager Digital, Vauld, and Babel Finance, into severe liquidity and solvency crises.

According to Hodlnaut’s since-edited LinkedIn profile, the lender recently held around $500 million in assets under management . It’s worth noting that if the firm’s terms of service resemble those of Celsius and Voyager, the depositors may be categorized as unsecured creditors in the case of bankruptcy. That could mean that they are unable to recover the entirety of their assets. 

Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.