Hodlnaut was once one of the largest crypto lenders in the market, with over $100 million in client funds and over 1,000 users as of February 2022. However, just a few months later, the Singapore-based crypto platform filed for creditor protection and froze customer withdrawal operations, leaving many to wonder what went wrong.
In this article, we’ll take a closer look at the rise and fall of Hodlnaut and what led to its downfall. We’ll also explore the potential for its acquisition by various parties and the impact on the crypto lending industry as a whole.
The Rise of Hodlnaut
Founded in 2019 by Juntao Zhu and Simon Lee, Hodlnaut quickly became one of the most popular crypto lenders in the market. By February 2022, the company had over $100 million in client funds and over 1,000 users, an increase of $1 million over the previous year.
However, the company’s success was short-lived. In early August, Hodlnaut froze customer withdrawal operations, citing the negative impact of the implosion of the Terra ecosystem and the general collapse of the crypto market on its financial health. In a statement, the company said it was exploring the possibility of “allowing users to withdraw their initial deposit, with accrued interest in full, at a reduced amount and close their account with Hodlnaut.”
The Fall of Hodlnaut
The situation only got worse from there. In November 2022, Hodlnaut was investigated by police in Singapore for alleged offenses of fraud and scam. The company and its directors were suspected of making “false statements regarding the company’s exposure to a certain digital token,” according to a police statement at the time.
Then, in December 2022, Hodlnaut filed for receivership and creditor protection, revealing that it owed $160.3 million, which is more than 60% of the company’s outstanding debt, to major crypto and fintech companies like Algorand Foundation, Samtrade Custodian, SAM Fintech, and Jean-Marc Tremeaux.
A series of tweets from blockchain researcher FatManTerra revealed that Hodlnaut lost up to $190 million after the Terra ecosystem went down. The researcher noted that the company allegedly “continued to claim that it had no exposure to Anchor” until recently.
Potential for Acquisition
Despite its recent struggles, there is still hope for Hodlnaut. According to an article published by Bloomberg, “various parties interested in the acquisition” of the crypto platform have contacted managers overseeing the company after it filed for creditor protection. The article cites an affidavit, saying that the managers are in the process of signing confidentiality agreements with parties wishing to acquire Hodlnaut.
The Impact on the Crypto Lending Industry
The fall of Hodlnaut is just one example of the struggles faced by the crypto lending industry in recent months. A number of other crypto lenders, including Celsius, BlockFi, and the lending unit of Genesis, have filed for bankruptcy amid the recent market downturn. Nexo, which is one of the few crypto lending companies to escape bankruptcy, has agreed to pay a total of $45 million to settle charges of violating investor protection laws.
In conclusion, the crypto lending firm Hodlnaut has faced a number of challenges in recent months, including debt, a police investigation, and a recent bankruptcy filing. Despite these obstacles, various parties have shown interest in acquiring the company, as managers overseeing Hodlnaut are in the process of signing confidentiality agreements. While Hodlnaut once stood as one of the largest crypto lenders in the market, the recent market downturn has led to a number of other companies in the same industry filing for bankruptcy. It remains to be seen what the future holds for Hodlnaut and the wider crypto lending industry, but it is clear that the sector is facing challenges and uncertainty in the present moment.