Another Singapore crypto firm in trouble

Another Singapore crypto firm in trouble

Hodlnaut says it's the subject of police proceedings and is slashing its workforce

(Reuters File Photo)
(Reuters File Photo)

SINGAPORE: The beleaguered cryptocurrency lender Hodlnaut says it is the subject of “pending proceedings” involving Singapore police and that it has slashed its workforce.

The proceedings also involve the Singapore attorney-general and the firm is unable to disclose any further information on the matter, Hodlnaut said in a statement on Friday. The firm has laid off 40 people, or about 80% of employees, according to the statement. 

The company said its founders are in Singapore and “working hard on the recovery plan”. Earlier this week, Hodlnaut said it had filed an application in Singapore to be placed under a form of creditor protection.

The troubles at Hodlnaut follow those at Zipmex, a Singapore-based crypto exchange that capped withdrawals last month after exposure to the troubled crypto lender Babel Finance hurt its finances.

On Monday Zipmex was granted more than three months of protection from creditors by the Singapore High Court. The reprieve will give the firm, which also has a large customer base in Thailand, additional breathing room to come up with a funding plan.

Some shareholders and potential investors in Zipmex have been urging chief executive officer Marcus Lim to step down over management decisions that they say led to a severe cash crunch.

Hodlnaut said on Friday that it was cutting all open-term interest rates to zero as of 5pm on Aug 22 to stabilise liquidity.

This year’s crypto rout has led to a number of blowups afflicting digital-asset exchanges, lenders and hedge funds. Some of those, as in the case of Hodlnaut, have hit Singapore.

Hodlnaut said its business had been hurt by losses at its Hong Kong subsidiary during the TerraUSD stablecoin crash. It also cited unusually large withdrawals, the overall crypto slide and “issues relating to certain user(s) who have deposited substantial amounts of cryptocurrency” with the firm.

Hodlnaut said it did not have any secured creditors. It said that the crypto lender Celsius Network had neither borrowed from nor lent to Hodlnaut, adding that Hodlnaut has an account with Celsius but hasn’t deposited any assets with Celsius.

Hodlnaut aims to restore its asset-to-debt ratio to at least 1 and eventually allow users to withdraw the full value of their cryptocurrency deposits.

The company said it expected to post its next update on Tuesday.

Police in Singapore declined to comment on the Hodlnaut case as the matter is before the courts, a spokesman said in response to a request for comment from Bloomberg News.

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