Crypto new crash – Hodlnaut lays off 80% of staff due to liquidity issues

Troubled crypto lender Hodlnaut has laid off 80% of its staff and sought legal intervention in Singapore in a bid to cut costs and stay afloat.

On Friday, Hodlnaut, which offers investment options for cryptocurrency in approved institutions with interest, revealed liquidity problems.

Hodlnaut confirmed that it terminated the employment of approximately 40 people “to cut corporate expenses.” According to the statement, the 10 remaining employees are “essential” to the current operation.

Crypto firm Hodlnaut in deep water

In response to the company’s filing for judicial review, the Singapore court will now appoint an administrator to review the lender’s accounts and operations.

Hodlnaut attributed its losses to its Hong Kong subsidiary following the TerraUSD crisis, in addition to extremely large withdrawal numbers, the general decline in cryptocurrency prices from last year’s highs, and issues with specific consumers making significant deposits.

Earlier this month, the company stated on Twitter that it would suspend withdrawals, deposits and coin exchanges on the platform.

Based on the latest notification, the crypto entity is awaiting proceedings with the Singapore Attorney General and the Singapore Police Force (SPF).

Is it too late for Hodlnaut to stay afloat? Image: Crast.net

Singapore police are keeping an eye on Hodlnaut

The company’s statement reads:

“This tough choice was made so that we can focus on stabilizing our liquidity and maintaining our assets while we figure out the best solution to preserve the long-term interests of our users.”

Hodlnaut is the latest company to struggle in this bear market, or as some would call it, a precursor to crypto winter.

After freezing customer withdrawals, cryptocurrency exchange Zipmex filed for bankruptcy in Singapore on July 22 to prevent legal action from creditors.

Regulators are also on the trail of Three Arrows Capital, a crypto hedge fund that defaulted on its loans to other prominent crypto lenders and is now insolvent.

Hodlnaut is the subject of a police investigation in Singapore. However, no other information was given about the status of the investigation.

Hodlnaut claims it had no investment exposure to the now-defunct 3AC, while chain analysis indicates it had exposure to Terra’s disastrous algorithmic stablecoin UST.

The cryptocurrency lender claims it has reduced its loan rates to 0% APR. According to the company, the decision will help balance liquidity and reduce operating expenses. The founders are reportedly “working diligently on a rehabilitation plan.”

In the meantime, no withdrawals have been allowed. The company expects to deliver the next update next week.

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Featured image from Newsweek, Chart from TradingView.com