Hodlnaut Records Nearly $200M Financial Shortfall, Court Affidavit Reveals

As mentioned in the affidavit, the company’s potential creditors currently stand at 17,513.

Singapore-based crypto firm Hodlnaut earlier this month halted withdrawal and filed for creditors’ protection to buy out more time to sort out its liquidity issue. On August 12, the company applied to be placed under judicial management. According to the affidavit supporting the application, Hodlnaut recorded a $193 million financial shortfall. Its outstanding liability stood at SGD 391 million (around $281 million), and its asset was SGD 122 million ($88 million).

“As of 8 August 2022, the Hodlnaut Group has an outstanding liability balance of SGD 391M and estimated realizable assets of SGD 122M in cryptocurrency. This financial position gives the Hodlnaut Group a realizable cryptocurrency Asset to Debt ratio of about 0.31 (ie. 31 cents on the dollar),” according to the court affidavit.

According to the company, it had about $317 million in UST, in Anchor Protocol on Terra. However, the infamous crash of the Terra ecosystem caused it to lose $189.7 million in May. Between June 14 and July 15, panic withdrawal from customers made Hodlnaut face an unexpected “greater than usual net outflows” estimated to be around $150 million. The drama did not end there, as the impact of the Terra (LUNA) crash which caused almost all the leading crypto assets to record a massive pull back from their all-time highs affected the company’s Bitcoin (BTC) and Ethereum (ETH) holdings.

But this financial shortfall is not the only fact about Hodlnaut that was revealed in a document. As mentioned in the affidavit, the company’s potential creditors currently stand at 17,513. For now, it is making plans to allow “limited exits” for users. This is expected to be done at 25 cents on the dollar. Crypto exchange FTX and other liquidity providers have been engaged on the proposal, as the embattled firm finds this more effective for clients than its liquidation.

In a blog post published on August 19, the company disclosed that it has laid off 80% of its staff to make some money available for its operations. It also disclosed that it is facing police proceedings in Singapore.

Hodlnaut further explained that it is not in liquidation as it seeks to come out with a stable return in the future.

The recent harsh market condition has forced other Singapore-based crypto firms such as Crypto exchange Zipmex and crypto lender Vauld to file for customer protection.

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John K. Kumi

Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.