Hodlnaut Confirms Interactions With Singapore Police, Job Cuts, Interest Rates Halts

In the wake of a statement by Hodlnaut confirming its request for judicial management on the 16th of August, the distressed platform has updated its original announcement providing more context on the matter.

In a blog post published on the 19th of August, a spokesperson for Hodlnaut said the firm had to decrease interest rates and lay off a substantial chunk of its employees.

Desperate Attempt at Conserving Liquidity

In an attempt to conserve as much capital as possible, 80% of the workforce – approximately 40 people, as reported by Bloomberg – has been laid off. Predictably, withdrawals have also been frozen, and the APR on deposits has been slashed to zero.

Ironically, at the time this article was written, the platform is still advertising up to 7.25% APY on all deposits.

Hodlnaut claims these measures are necessary in order to stay afloat until the request for judicial management is hopefully approved, stating that due to a loss in the value of cryptocurrencies, a liquidation at current rates would not allow users to withdraw even their initial deposit.

Potential Future Withdrawals Under Specific Conditions

The document also outlined plans for future withdrawals, pending the approval of the requested judicial manager, after which the users’ account with Hodlnaut would be closed. The language used to describe this potential outcome is quite contradictory, promising a so-called “full withdrawal” at a discounted amount.

We have heard you and understand that some of our users urgently need to access their funds. As such, we are also exploring the option of allowing users to withdraw their initial deposit, with interest accrued in full, at a discounted amount and close their account with Hodlnaut.

Although this phrase is quite confusing, its meaning can be inferred from the FAQ of the blog post, where the Hodlnaut spokesperson confirmed that the company has no secured creditors. This seems as an attempt at dancing around the definition of “unsecured creditor,” meaning a creditor who has nothing to fall back on in case the debtor defaults on their debt.

Furthermore, the company places part of the blame for its financial situation on “depressed prices,” using this as an excuse to block withdrawals. However, the same FAQ also clarified that withdrawals of stablecoins – presumed to be immune to depressed prices until earlier this year – have also been blocked.

Hodlnaut has promised a future update on the 23rd of August. In the meantime, the firm has made a copy of the judicial management request available to users of the platform. This update will hopefully contain an explanation of the ongoing dealing with the Singapore Police Force, as Hodlnaut has stated that details cannot be shared with the public for the moment.

The post Hodlnaut Confirms Interactions With Singapore Police, Job Cuts, Interest Rates Halts appeared first on CryptoPotato.

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