Algorand Foundation Confirms $35M Exposure to Crypto Lender Hodlnaut

The non-profit organization behind the development of the Algorand blockchain infrastructure – Algorand Foundation – has confirmed a $35 million USDC exposure to Hodlnaut.

Additionally, it said it is pursuing all legal remedies to maximize asset recovery from the embattled crypto lender.

Despite the hole in the balance sheet, the organization does not expect to trigger any operational or liquidity concerns.
The Algorand Foundation, in an official announcement, said these funds were surplus to the daily requirements, representing less than 3% of its assets.

“As part of the Foundation’s mission, from time to time, we invest a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem development, and these funds were invested for that purpose.”

A majority of Algorand’s investment consisted of locked, short-term deposits, which became inaccessible after Hodlnaut announced the suspension of withdrawals and deposits on August 8th.
Hodlnaut’s cause of unraveling was due to the deployment of more than $300 million in TerraUSD (UST) on Anchor Protocol, a service that vouched for a maximum of 20% yield on UST staking.
The collapse of the Terra ecosystem tokens proved to be catastrophic for the platform.
In a bid to stay afloat due to its liquidity crisis, Hodlnaut laid off approximately 80% of the workforce. The company also slashed interest rates to a 0% annual percentage rate as part of its efforts to cut costs.
Hodlnaut was placed under Interim Judicial Management by the Singapore High Court, thereby temporarily protecting it from legal proceedings by third parties and allowing it to rehabilitate.

The post Algorand Foundation Confirms $35M Exposure to Crypto Lender Hodlnaut appeared first on CryptoPotato.

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