Algorand foundation reveals $35m exposure to troubled crypto lender Hodlnaut

In a recent announcement, Algiorand Foundation, a non-profit organization that supports the Algorand Blockchain informed its community and the general public of a $35million USDC exposure to a Singapore- based Crypto lender Hodlnaut, placed under “Interim Judicial Management “after the lender suspended withdrawals from its platform from August 8, 2022.

According to the announcement posted on their website, the said funds were ‘surplus’ to day-to-day transaction requirements and they represent less than 3% of the foundations’ overall assets. They also revealed that they do not expect “ operational or liquidation issues due to the action“

In an attempt to explain the reason for the exposure, Algorand revealed that they undertake periodical investments of its surplus treasury capital to generate yield to boost the blockchain’s ecosystem, and the investment into Hodlnaut was one of such.

They also revealed that the major patriot of the said investment is a locked, short-term deposit that became inaccessible after the lender’s withdrawal constraints. The foundation assures its community that it is ”pursuing all legal remedies to maximize asset recovery.”

On August 28th, 2022, The High Court of Singapore appointed Ms. Angela Ee and Mr. Aaron Loh of EY Corporate Advisors Pte Ltd, who are nominees of Algorand to act as interim judicial managers at Hodlnaut with the aim of preserving, identifying, and protecting the lender’s assets until further court action is determined. 

The Singapore-based Crypto Lender, was one of the victims of the recent downturns in the crypto space, as a result, it applied to be put under said judicial management on August 13th, exactly 5 days after it restricted withdrawals. 

Judicial management is a method of restructuring debt that sees an entity manage the assets, business, and property of the ruptured company. During this process, the company is spared from any legal action from third parties.