Hodlnaut cuts 80% of staff, applies for Singapore judicial management

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Cryptocurrency lender Hodlnaut has cut most of its workforce and has applied to be placed under judicial administration due to bleak financial conditions.

Hodlnaut, which offers interest-bearing cryptocurrency investment options in vetted institutions, confirmed the dire situation on Friday. The company’s poor financial position was put on hold by the losses incurred by its Hong Kong subsidiary during the infamous TerraUSD (UST) crash, the scale of withdrawals and the general downturn in the cryptocurrency markets.

The company has chosen to apply for judicial administration, which will see a Singapore court appoint a director to review its accounts and activities as a last resort to avoid liquidating Hodlnaut’s holdings of Bitcoin (BTC) and Ether (ETH).

Judicial management will also allow the company to enact a recovery plan and possibly rehabilitate the company. The company’s statement indicated that it plans to restore its asset-to-debt ratio to 1:1 to allow users the ability to withdraw their initial cryptocurrency deposits.

Hodlnaut also indicated that it was exploring the option of allowing users to withdraw initial deposits with interest fully accrued before closing their accounts with Hodlnaut. This is now subject to approval by the soon to be appointed Chief Justice.

The company will take steps to stabilize liquidity by cutting burn rates, which will see all open-term interest rates changed to 0% APR starting August 22. The company also confirmed that it has withdrawn 40 employees, which is 80% of a team, in order to further reduce expenses.

The Judicial Administration application will be submitted on August 22, just two weeks after Hodlnaut suspended withdrawals and deposits on its platform. The company confirmed that it has not had any investment exposure to the now-bankrupt lender Three Arrows Capital, but on-chain analyzes indicate that Hodlnaut was exposed to the failed UST stable algorithm.

Hodlnaut also confirmed that proceedings are still ongoing between Singapore’s attorney general and the Singapore police force.

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