Top Cryptocurrency News: Hodlnaut Now Placed Under Creditor Protection After Freezing Withdrawals

On August 29, the Singapore court placed Singapore-based crypto lending company Hodlnaut under interim judicial administration, a kind of creditor protection scheme.

The court orders were issued three weeks after Hodlnaut suspended all trading and withdrawals on its platform, alleging a liquidity crisis. On August 30, the crypto lending platform informed its users via an official blog post that Ee Meng Yen Angela and Aaron Loh Cheng Lee, of EY Corporate Advisors, had been appointed as interim judicial managers. 

According to the blog post, “the Court delivered its judgment on August 29, 2022, and it has been announced that Hodlnaut would be placed under Interim Judicial Management.”

The crypto lender sought judicial management to prevent forced liquidations during the bear market. Under Singapore legislation, the aforementioned creditor protection mechanism permits financially challenged businesses to rehabilitate themselves. Under this law, the court appoints a judicial manager to take over the company's directorship for the time being.

As CoinGabbar reported earlier this month, Hodlnaut laid off 80% of its employees before seeking judicial management. The company intends to use the judicial management period to restore its asset-to-debt ratio to 1:1, allowing users to withdraw their initial cryptocurrency investment.

The crypto lender previously stated that they were looking into the possibility of allowing users to withdraw their initial deposits with all accumulated interest before terminating their accounts, which is currently subject to approval by newly appointed judicial managers.

Hodlnaut is one of several crypto lending companies that have succumbed to the crypto contagion triggered by the now-defunct TerraUSD (UST) algorithmic stablecoin's collapse. The implosion of UST resulted in the collapse of a $40 billion Terra ecosystem, and many crypto lending companies with UST exposure eventually failed.

Read also: Former US official: "Speed Limit On Crypto Highway" Must Be Set By SEC