Over the past week, Hodlnaut (a crypto landing site) has restricted withdrawals and deposits. Just like the rest of its other platforms, the Singaporean firm cited dire market conditions as a loophole. Nevertheless, a remarkable thing here is that the crypto startup has maintained above $187 million in TerraUSD (UST), which has been rebranded as TerraClassicUSD (USTC).
Hodlnaut Files in Singapore for Creditor Protection
Speculation points to the suspension placed by Hodlnaut on its services as another example of the impact generated by the abrupt collapse of the Terra (LUNA) ecosystem. Keeping this scenario in mind, Hodlnaut filed a case with the High Court of Singapore to protect itself from its creditors by being filed in receivership. Recently, a blog post was published by the company on its official website indicating that it was seeking to escape the forced liquidation of its assets.
The company classified this as a “sub-optimal solution” because it would then be forced to trade its consumers’ crypto assets, including Ethereum and Bitcoin, at current prices which are significantly low. Nevertheless, the company is convinced that going through judicial management is a viable solution to better recover. Therefore, he added that the object of the filing is to be filed under judicial management.
According to the current law in Singapore, the term “judicial management” refers to a redress mechanism available to companies that are under pressure related to finance. The respective procedure requires the appointment of an autonomous legal assistant replacing the directors of the respective platform for its management. Apart from this, a moratorium is also provided by the judicial management filing to deal with lawsuits and claims.
While explaining the importance of this decision, the official message highlighted that the respective interval will instead leave some convenience to direct its attention to the efforts related to the recovery strategy as well as the restoration of the company. Although the application was filed by the company, it revealed that no hearing had yet taken place in court. The platform expects the entire process to be completed in the next few months and is planning accordingly.
More and more crypto companies are asking for moratoriums
Hodlnaut is now listed among other crypto sites that have filed for creditor protection. The latest of these is Zipmex which gained approval on Monday, while Three Arrows Capital is still under multi-billion dollar credit following its June leveraged crash.
Hodlnaut believes that after being placed under legal management, it will have the ability to create a turnaround strategy to evade liquidation of client assets. Despite this crypto winter (which has troubled the industry throughout this year so far), major crypto tokens like Bitcoin and Ethereum are showing signs of recovery. However, the growing number of crypto firms moving towards moratoriums means a relatively pessimistic approach.