Hodlnaut Creditors not Looking for a Restructure, Demand Liquidation
- The creditors of crypto lender Hodlnaut prefer the liquidation of assets and are not in favor of the firm’s restructuring plans.
- A restructure would put the directors, who led to the collapse of the crypto firm, once again in charge of its operations.
- Hodlnaut had exposure to Do Kwon’s Terra ecosystem and Sam Bankman-Fried’s crypto exchange, FTX.
- Recently, the Singapore Police launched an investigation into the crypto lender over reports of alleged fraud.
Out of the many crypto firms that have filed for protection from creditors under Chapter 11 bankruptcy, many have chosen to follow a restructuring plan so that they can continue with their operations and pay the people they owe money to. However, some creditors want these crypto firms to sell off all the assets that they may have so that they can recover money as soon as possible. It is crucial to note that the creditors of crypto lender Hodlnaut prefer the liquidation of assets.
As per a report from Bloomberg, the creditors of Hodlnaut are not very supportive of the restructuring plan that was presented to them because that would mean that the directors under which the Singapore based crypto lending and borrowing platform collapsed would remain in charge of the operations until the firm is able to pay back the creditors.
Interestingly, the report stated that Hodlnaut’s creditors want to dissolve the firm as soon as possible so that they can maximize what they can get from the platform. This will help the creditors distribute the remaining assets among themselves and prevent a further collapse of the firm since the crypto winter is not going to be over anytime soon.
As reported earlier by BitcoinWisdom, Hodlnaut lost $190 million due to the crash of the Terra stablecoin, or UST (now USTC or Terra Classic USD), after it converted some of its digital asset holdings to UST in early 2022. The collapse of Terra under the leadership of Do Kwon, whose last known location is Siberia, hurt a lot of crypto firms.
Following its withdrawal halt, Hodlnaut let go of some employees and also filed for placement under interim judicial managers appointed by court order to protect the interests of creditors, according to a report from BitcoinWisdom. It is also crucial to note that the crypto lending platform deleted over 1,000 “key” documents that could have proven to be of significant value against the firm’s practices and its exposure to the stablecoin.
The crypto lending platform’s troubles refused to end as it was once again hit by the collapse of the multi-billion dollar crypto exchange, FTX, under the leadership of its founder, Sam Bankman-Fried, also known as SBF in the crypto industry. Hodlnaut reportedly held close to $13 million in the exchange, which also froze withdrawals and filed for Chapter 11 bankruptcy. On the other hand, SBF has denied all the allegations imposed upon him and stated that FTX would have been solvent if he had continued leading the firm.
Interestingly, the Singapore Police launched an investigation into the crypto lender after receiving multiple reports that the firm’s directors and executives were cheating on their customers. The reports also claimed that Hodlnaut “made false statements about the company’s access to a certain digital token.”