Singapore-based Hodlnaut freezes customer accounts, drops license application
Crypto lender Hodlnaut said it suspended withdrawals, deposits and token swaps "due to recent market conditions."
Singapore-based crypto lending platform Hodlnaut announced a freeze on withdrawals citing declining market conditions.
Holdnaut added that it has withdrawn its license application from the Monetary Authority of Singapore (MAS).
Dear users, we regret to inform you that we will be halting withdrawals, token swaps and deposits immediately due to recent market conditions. We have also withdrawn our MAS licence application. Here is our full statement https://t.co/5KfHUBzWsn Our next update will be on 19 Aug.
— Hodlnaut (@hodlnautdotcom) August 8, 2022
With this move, Hodlnaut may no longer offer digital payment token (DPT) services in the Asian region.
In the meantime, the struggling platform said it is working closely with Singaporean law firm Damodara Ong LLC on a recovery strategy. It is expected to issue the next public update on Friday, August 19, 2022.
The fate of Hodlnaut users
In the announcement, Hodlnaut stated that the resumption of withdrawal and token swap will take a while as it needs to finalize with its stakeholders on the recovery strategy. With the suspension of withdrawal requests, users were advised to refrain from making deposits as the funds will not be credited to their account.
Users affected by the development have taken to Twitter to express their disappointment with CeFi platforms.
Ultimate rekt lesson for CeFi users:
“Not your keys, not your crypto.”
— cryptofunded (@FundedCrypto) August 8, 2022
Tony Dhanjal, Head of Tax for Koinly, told CryptoSlate that the news has “echoes of the Celsius Network, Voyager and 3 Arrows Capital – all 3 filing for bankruptcy.”
“The dot.com boom and bust of the early noughties is testament to what is happening in the crypto space – the weaker players are being weeded out by market forces – Hodlnaut won’t be the last either.”
Dhanjal’s comments suggest further insolvencies for “weaker” crypto companies in the future; at present, it is unknown if Hodlnaut will be one of them.
Hodlnaut took a long to come clean
On July 18 TechinAsia published a report on Hodlnaut’s potential exposure to the Terra collapse. It confirmed that crypto intelligence firm Nansen identified two wallets linked to Hodlnaut, which had been used to move large amounts of UST into Terra’s Anchor protocol before the collapse.
Hodlnaut CEO Juntao Zhu denied the claim saying the platform did not take losses on Terra’s UST.
Following the report, Nansen CEO Alex Svanevik called out the lending platform to be more transparent to users on the state of their funds.
I would expect more transparency from @jt_hodlnaut on who this mysterious counterparty is.
The counterparty was going degen with MIM and UST while managing customer funds for @hodlnautdotcom.
Personally think users are owed much more transparency here.
— Alex Svanevik🐧 (@ASvanevik) July 19, 2022