Hodlnaut Records $193M as Financial Shortfall From UST Crash

Troubled crypto lender Hodlnaut reports a total financial shortfall from a TerraUSD (UST) crash to be worth approximately $190 million.

An affidavit had been filed earlier this month to support the Singapore crypto lender’s application for judiciary management. According to the affidavit, the particular cause of Hodlnaut’s suspension on withdrawal was outlined.

Based on the analysis made, Hodlnaut already had an outstanding liability of 391 million Singapore Dollars which is approximately $280 million. At that time, it only had assets worth SGD 122 ($88 million) transpiring into a shortfall of $193 million. As stated in the affidavit, 

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

Hodlnaut Blames TerraUST Crash For Losses

Asian crypto lender, Hodlnaut had placed a pause on withdrawal on its platform citing the bearish market condition as the reason. As a remedy, the lender was considering a recovery option to avoid forced liquidation of its assets. A few days later, Hodlnaut submitted a filing for a judiciary management with the Singapore High Court.

The crypto lender regarded the judiciary management as a better option compared to forced liquidation where the assets will be sold at a depressed price compared to their previous high price. Most importantly, the judiciary management protects the crypto firm from creditors and liquidation.

Part of the offerings of the judiciary management is the provision of a judiciary manager who will act in the stead of the company’s directors. Once appointed, the independent judiciary manager will oversee the affairs of the firm including the process of the judiciary management.

Lastly, is a moratorium that permits a temporary pause on creditors who wish to file a lawsuit against the firm. 

Presently, those creditors are estimated to be around 17,513. Meanwhile, in its last released update to customers on the status of the judiciary management, it attributed the specific cause of financial loss to the exposure of its Hong Kong subsidiary to the TerraUST which crashed unexpectedly.

Hodlnaut’s investment in the TerraUST amounted to $317 million through Anchor Protocol. By the time the stablecoin crashed, Hodlnaut’s loss was recorded to be worth $189.7 million.