Algorand Foundation Confirms $35M Exposure to Crypto Lender Hodlnaut

The non-profit organization behind the development of the Algorand blockchain infrastructure – Algorand Foundation – has confirmed a $35 million USDC exposure to Hodlnaut.

Additionally, it said it is pursuing all legal remedies to maximize asset recovery from the embattled crypto lender.

• Despite the hole in the balance sheet, the organization does not expect to trigger any operational or liquidity concerns.
• The Algorand Foundation, in an official announcement, said these funds were surplus to the daily requirements, representing less than 3% of its assets.

“As part of the Foundation’s mission, from time to time, we invest a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem development, and these funds were invested for that purpose.”

• A majority of Algorand’s investment consisted of locked, short-term deposits, which became inaccessible after Hodlnaut announced the suspension of withdrawals and deposits on August 8th.
• Hodlnaut’s cause of unraveling was due to the deployment of more than $300 million in TerraUSD (UST) on Anchor Protocol, a service that vouched for a maximum of 20% yield on UST staking.
• The collapse of the Terra ecosystem tokens proved to be catastrophic for the platform.
• In a bid to stay afloat due to its liquidity crisis, Hodlnaut laid off approximately 80% of the workforce. The company also slashed interest rates to a 0% annual percentage rate as part of its efforts to cut costs.
• Hodlnaut was placed under Interim Judicial Management by the Singapore High Court, thereby temporarily protecting it from legal proceedings by third parties and allowing it to rehabilitate.