Troubled Asian crypto lender Hodlnaut, which suspended client withdrawals last week, has applied for protection against creditors in Singapore as it seeks to solve its liquidity crisis.
Announcing the information on Tuesday, Hodlnaut stated that the company had submitted an application to the Singapore High Court on August 13 to be put under judicial administration, a procedure that would prevent any legal claims and procedures from being brought against it by creditors.
Hodlnaut’s action is comparable to those taken by Zipmex and Vauld, who both requested Singaporean creditor protection and were given roughly three months to settle their financial problems.
Hodlnaut struggles to prevent forced Crypto assets liquidation
Hodlnaut stated that it is collaborating with experts and seeks to avoid being forced to liquidate its assets at the present lower rates. The embattled crypto lender is anticipated to give its subsequent update on August 19.
“The Founders and the Hodlnaut team in Singapore are closely collaborating with our lawyers as we attempt to stabilize our financial condition, and we have carefully considered all of our options. We are trying to prevent a forced asset liquidation because it would compel us to sell our clients’ cryptocurrencies like BTC, ETH, and WBTC at the present low asset prices.”
The Singapore High Court will designate a judicial manager, an impartial officer of the court, to supervise Hodlnaut as part of the court’s judicial management procedure.
According to Hodlnaut, this procedure might take up to a few months. For that purpose, the Crypto lender has applied for Tam Chee Chong of Kairos Corporate Advisory to be designated as the interim judicial manager and subsequently the judicial manager.
Hodlnaut was launched in Singapore in 2019, in order to allow customers to deposit and earn interest on their cryptocurrency holdings. The company stated that as of December of last year, it had over $500 million in assets under management and 10,000 active users.
The funds of Hodlnaut’s clients are still frozen while it is under judicial management. The company hasn’t set a specific date for when withdrawals would probably start to be accepted.
Hodlnaut also added that the firm would be exploring options for enabling users to access emergency exit liquidity, but these are still pending conversations waiting for approvals from various stakeholders.