Terra’s collapse in May has been the most difficult event to happen to crypto this year and firms like Hodlnaut are still feeling the impact.
Almost six months later, and the ripple effect of Terra’s collapse in May is still being felt across the entire crypto industry. And according to a recent Bloomberg report, Singapore-based crypto lending platform Hodlnaut lost around $190 million as a result of its exposure to Terra’s UST stablecoin.
Hodlnaut Caught Up in Terra’s Mess
By far, Terra’s collapse in May has been the most difficult event to happen to crypto this year. The crash saw its native token LUNA, and its stablecoin UST head for the rocks. But more than that, even the general crypto market was thrown into a downturn.
As a result, many lenders who had direct and sometimes indirect exposure to the UST, have had to file for bankruptcy.
On Hodlnaut’s part, Bloomberg claims it converted some percentage of its digital assets holdings to UST in early 2022. A move that will later amount to a $190 million loss for the firm. But per the report, the firm has somehow continued to downplay how deeply exposed it truly was to Terra.
According to its recent coverage, Bloomberg claims that Hodlnaut may have deleted over a thousand documents that could link it to Terra/LUNA. This explains why the $58.3 million issue between the firm and its Hong Kong subsidiary remains unresolved.
Recall that Holdnaut halted token transfers, withdrawals, and deposits in August. It also laid off over 80% of its staff a short while later. But it appears that the issues were well known beforehand. Some of its employees already initiated withdrawals to the tune of over $500,000 worth of assets. And that was barely a month before the freeze was announced.
Any Hopes of Survival?
Despite the struggling reality with its finances, Hodlnaut has begun taking steps to ensure it stays afloat. In August, its request to be placed under the judicial management of the Singapore High Court was granted. This means that while it draws up its financial recovery plans, the firm can rest assured that there will be no forced liquidation of its assets. Essentially, as long as the creditor protection holds, there can be no legal actions or proceedings against the company.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this.
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