Singapore based crypto lender Hodlnaut halts withdrawals amidst crisis

Hodlnaut followed in the footsteps of Celsius as the lender halted withdrawals and token swaps. Hodlnaut has withdrawn its Monetary Authority of Singapore license application, due to the unforeseen market conditions. 

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Hodlnaut halts withdrawals, token swaps and withdraws MAS application

Hodlnaut informed users in a blog post that withdrawals, token swaps and deposits are halted with immediate effect. Hodlnaut cited recent market conditions for the decision to stabilize liquidity and preserve assets. The crypto lender reassured users that the decision to halt their digital payment token (DPT) services, token swap and withdrawals is a result of market conditions and the liquidity crisis. 

Interestingly, the blog post in which Hodlnaut informs users of the update was first published on July 15, 2022 and updated today, August 8. Proponents and influencers on crypto Twitter have criticized Hodlnaut for the delay in making the announcement. 

In addition to lending, Hodlnaut offered token swap services that are being rolled back, therefore the financial services firm has withdrawn the license application submitted to the Monetary Authority of Singapore.

Hodlnaut is working with Damodara Ong LLC on the feasibility and timelines of the recovery plan with users’ best interests in mind. Hodlnaut has turned off social media except Twitter, email and Telegram, in order to respond to queries. 

Users have access to their account and balance, however withdrawals remain disabled. Hodlnaut has informed that users will continue earning interest and payouts will be every Monday, until further notice. Hodlnaut’s next update is scheduled for August 19. The lender has reset everyone’s interest payout settings to “in-kind” effective immediately after the announcement. 

Terra whistleblower highlights Hodlnaut crisis before unraveling

FatManTerra, popular as Terra’s LUNA-UST crash whistleblower called out Hodlnaut weeks ago, in June 2022. Hodlnaut was connected to UST crash, the whistleblower noted:

On the 6th of April, Hodlnaut added UST to their stablecoin repertoire, boasting some great interest rates. 14% on a CeFi platform is very high for a stablecoin, even higher than what 3AC was offering lending platforms without even factoring in the site's disbursement vig.

Despite exposure to UST, Hodlnaut failed to inform users and dealt with the liquidity crisis in a delayed manner. Halting withdrawals and working on a recovery plan in the second week of August when the firm lost funds exposed to the UST swap during the de peg. 

The fall of Hodlnaut is in line with the collapse of financial firms post the collapse of Terra’s UST.