On Saturday, September 9th, 2022, Algorand Foundation announced on Twitter its exposure to beleaguered crypto mending firm Hodlnaut. Further details around the case was given in a blog on its official website, published on the same day.
In its blog, Algorand Foundation informed the community of their exposure to Hodlnaut, which accounts for 35 million USD worth USDC. This amount is considered as a default capital given the Singapore based lending firm’s freezing of withdrawals operations. Further in its announcement, the organization also noted their efforts towards ensuring the maximum recovery of their assets.
It is noteworthy that Algorand is a prominent institutional-grade blockchain network which holds the functionality of smart contract-like cutting edge features. Meanwhile the Algorand Foundation is a community driven non-profit organization working towards development of Algorand blockchain’s ecosystem.
Organization Assures of Negligible Effect
In the blog, the foundation noted the locking up of its majority investment for the short term which has now become out of reach given the freezing of withdrawals on the platform.
Yet the Algorand Foundation ensured the investment in an embattled crypto firm of 35 million USD barely accounts for 3% of overall assets belonging to the organization. Due to this, they are not anticipating any issues to face in future related to liquidity or operations.
Terra (LUNA) Collapse Triggered Hodlnaut’s Fall
According to the reports, crypto lender Hodlnaut had an investment of staggering 300 million USD in fallen stablecoin TerraUSD (UST) of Terra network. With the fall of UST stablecoin, the crypto lender had to face a massive cash crunch.
TerraUSD (UST) was an algorithmic stablecoin that meant to peg its value with the USD. Its de-pegging with fiat currency dollar led to its collapse, followed by Terra network’s native LUNA token. This dramatic fall of the whole network turned out to be a nightmare for the crypto industry and triggered a ripple effect all across the space. Hodlnaut was no exception given its direct involvement via its investment, making the lending firm suspending its operations related to withdrawals and trading.
It was a matter of time and after several weeks, Singapore Court placed under a creditor protection initiative, Interim Judicial Management over the Hodlnaut.
Source: https://www.thecoinrepublic.com/2022/09/12/how-algorand-foundation-will-pass-through-hodlnaut-issue/