Crypto platform Hodlnaut explores user deposit withdrawals, lays off 80% of staff

CRYPTO platform Hodlnaut says it is exploring the option of allowing users to withdraw their deposits and interest at a discounted rate, but will have to review and have the process approved by the judicial manager.

In an update on Friday (Aug 19), Hodlnaut says is currently applying for judicial management, with the courts set to hear their application on Monday.

In an effort to stem cash burn, Hodlnaut will change all open interest rates to 0 per cent annual percentage rate. The company has also laid off 80 per cent or about 40 employees to reduce expenses, with only key functions retained.

The losses suffered by Hodlnaut’s Hong Kong subsidiary during the TerraUSD implosion, unusually high volume of withdrawals and the decline of cryptocurrency prices as well as issues with certain users’ deposits of substantial amounts of cryptocurrency have been cited as reasons for the application. The company believes that judicial management will avoid a force liquidation of bitcoin and ethereum holdings at depressed prices, as well as users only getting cents on a dollar in the event of liquidation.

Hodlnaut believes that judicial management will give the company the opportunity to execute a recovery plan and rehabilitate the company. The crypto platform aims to restore asset to debt ratio to at least 1, and eventually allow users to withdraw the full value of their cryptocurrency deposits.

According to the frequently asked questions section of the update, the company says that both founders, Simon Lee and Zhu Juntao, are in Singapore and working on the recovery plan. Further in the section, Hodlnaut says there are also no secured creditors and it did not borrow or lend to insolvent crypto platform Celsius.

The company also revealed that there are pending proceedings with the Singapore Attorney-General Chambers and Singapore Police Force, but is unable to disclose any information.