- Embattled exchange Hodlnaut has seen its rehabilitation plans immediately halted
- Hodlnaut’s candidate choice was yesterday rejected by a creditor body
- The exchange is out of funds after losing $190 million in the Terra UST collapse
The efforts of embattled crypto exchange Hodlnaut to rebuild itself have hit an immediate stumbling block after its proposed candidate for the position of rehabilitation overseer was rejected. Hodlnaut froze user accounts and all activity on August 8 citing market conditions and other factors, since when numerous allegations of mismanagement have been publicised, with the latest coming last week and accusing the exchange of lying about its exposure to the Terra UST crash. It has since stated a wish to rebuild, but the process has clearly not started well.
Hodlnaut Lost $190 Million in Terra Crash
Hodlnaut is the latest victim of the crypto contagion which has swept through the space in the last three months, informing customers two weeks ago that it was shuttering services because it was out of funds. It put this down to “recent market conditions”, but the truth of the matter has since emerged, with Twitter whistleblower FatMan (@FatManTerra) revealing last week that the exchange had lied over its exposure to the Terra UST collapse:
In a new filing from Hodlnaut, they admit to have had most of their AUM in UST through their HK DeFi spin-off entity, and they lost a whopping $190m in the Terra crash. Despite this, they continued to tell customers they had zero Anchor exposure. Send JT and CT to prison. https://t.co/6knPSgrV8r pic.twitter.com/e3wt7VgfY8
— FatMan (@FatManTerra) August 19, 2022
The revelation that a Hodlnaut-related entity had bankrupted the company after losing $190 million in the Terra collapse is not surprising in itself, but users have every right to feel aggrieved after they were assured this wasn’t the case.
Preferred Rehabilitation Candidate Rejected
On the same day these revelations came out, Hodlnaut announced that it was sacking 80% of its workforce and revealed it was under investigation by the Singapore police. Hodlnaut has since filed for Interim Judicial Management (IJM), a process where a caretaker or caretakers are put in charge to try and steer the business back in the right direction and clear debts.
Hodlnaut posted an update overnight to explain that it had proposed Mr. Tam Chee Chong, Director of Kairos Corporate Advisory Pte Ltd, to oversee the rehabilitation, but this was shot down by a body representing the exchange’s 120,000 creditors,, who proposed a three-person panel from Grant Thornton instead – the same company that oversaw the liquidation of Cryptoptia.
A hearing on the matter will take place on Friday, but it looks highly unlikely that Hodlnaut will get its way.
